Karnataka's industry bodies, who lobby with the government for sops and incentives on behalf of their respective industries, have asked the state government to reduce value added tax (VAT) rates by 50 basis points.
The tax proposals made by industry bodies - including Bangalore Chamber of Industry and Commerce (BCIC), Federation of Karnataka Chambers of Commerce & Industry (FKCCI), Karnataka Hosiery and Garment Association (KHAGA), and Karnataka Small Scale Industries Association (KASSIA) - come in the backdrop of the state budget to be presented early next month.
At present the government levies 5.5% to 14.5% VAT on most commodities, which the industry bodies want reduced to 5% to 14%. The garment sector wants the VAT rate reduced to 4% from 5.5%. "Reduction in VAT would help to give a much needed impetus to the growth of the textile industry," said Sajjan Raj Mehta, chairman of the taxation committee at KHAGA. Cloth, he said, has been under more inflationary pressure than bread. FKCCI has also asked the government to exempt textile traders from entry tax. BCIC has recommended a reduction in VAT rates levied on aircraft turbine fuel from the current level of 28% to 20%. "We also seek exemption from payment of VAT on industrial canteens and on hybrid vehicles," said K R Girish, past president, BCIC.
FKCCI has asked for road tax on two wheelers to be revised to 10% for two wheelers costing up to Rs 75,000, and 12% for vehicles costing above Rs 75,000. At present road tax on two wheelers is 10% for vehicles below Rs 50,000 and 12% for vehicles above Rs 50,000. "With the increase in the cost of vehicles the common man ends up paying the higher rate of 12%," said K Shiva Shanmugam, president, FKCCI.