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After a month, industry reaches consensus for zero VAT on bicycles
January, 12th 2015

After a stalemate of on removal of Value Added Tax (VAT) on bicycle and bicycle parts for over a month, a consensus has been reached between different groups of bicycle manufacturers in the industry who have agreed to do away with the tax.

Deputy chief minister Sukhbir Singh Badal on December 12 announced in Ludhiana that VAT on bicycle would be removed. However, he was told by a section of industry that removal of entire tax from the industry would lead to losses not only to the government, but to the industry.

Badal had later asked the industry to discuss the issue among them and inform him when evera consensus is reached. Several rounds of meetings were held between the cycle industry and excise and taxation officials to discuss the issue.

Shiromani Akali Dal (SAD) industrial wing president Satish Dhanda performed a key role for the industry to reach a consensus. Sukhbir had himself asked Dhanda to discuss the issue with the industry, so that the issue of VAT could reach a logical conclusion.

The industry has now reached a consensus and has agreed to remove 6.5% VAT. United Cycle and Par ts Manufacturer Association (UCPMA) that was in favour of making VAT zero on the bicycle industry was now planning a meeting with Sukhbir so that entire situation could be discussed with him.

UCPMA president Charanjit Singh Vishivkarma said, “Initially we will hold talks with excise officials at Chandigarh so that they could be made to understand that the issue has been resolved. Afterwards a proposal of removal of VAT will be sent to Badal.”

“The roadster or black bicycle would become cheap by at least Rs. 150 that would be beneficial for the poor who usually use this cycle,” Vishivkarma said.

On the other hand many other organisations, including Federation of Industrial and Commercial Organization (FICO), Bicycle Research and Development Organization (BRADO) and G13 Cycle who were earlier reluctant to support the demand of removal of VAT from bicycle have now agreed upon the demand.

These associations have asked the government that if the VAT was removed from bicycle, then Central Sales Tax should also be zero. FICO president Gurmeet Kular said, “There should be no increase in VAT on steel that was at present 2.75%. Exporters should get 1.75% VAT duty drawback as refund.”

Meanwhile, Satish Dhanda said all industries have unanimously agreed and have asked the state government to remove the tax. “A unanimous resolution was passed on Friday in which the differences between two groups of industry were resolved and all were brought on the same platform. My next mission will be to bring all groups together for upgrading of technology of the industry,” Dhanda said.

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