The Auto Parts Manufacturers Association (India) on Wednesday thanked the government of Punjab for the recently announced proposal for the reduction in the Value-added Tax (VAT) on iron and steel items.

In a press note released to the media, association president Gurpargat Singh and general secretary Ranjodh Singh expressed their views, saying that this step of the state governemnt would be highly beneficial to iron and steel rolling mills and pipe manufacturers.

Under the new structure, it has been proposed to reduce VAT from 4.95 per cent to 2.5 per cent, with surcharge of 10% on scrap. The order will be notified and implemented from February 1, 2014.

Gurpargat Singh Kahlon also appealed to the state government to reduce VAT on auto parts from 12.75% to 4.5% at par with tractor and combine parts due to the reason that most of the items of auto parts are used with same materials, sizes and specifications but the VAT rate on auto parts is 12.75% while on tractors and combine parts it is 4.5%. "Due to this difference and high rate of VAT on auto parts, this industry has become uneconomical and uncompetitive. For the last several years our association is demanding continuously for the reduction of VAT on auto parts which would be big relief and give a big boost to this sector."