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FKCCI seeks reduction in VAT rates cut in APMC cess
February, 27th 2012

The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has urged the government to widen the tax base by conducting an extensive and systematic survey to include potential unregistered dealers in the state. Further, VAT awareness programme is essential to lure such dealers for voluntary registration and also such dealers should not be heavily penalized if they approach the department of commercial taxes voluntarily, the chamber said.

In a pre-budget memorandum submitted to the state chief minister D V Sadananda Gowda, who also holds the finance portfolio, the FKCCI has sought reversion of value added tax (VAT) rates to 4 per cent and 12.5 per cent on major commodities. During the last budget, the then chief minister B S Yeddyurappa had increased the tax rate to 14 per cent on major commodities.

B T Manohar, chairman, state taxes committee, FKCCI, said, Our main demand is to have uniform floor rates. Even the Empowered Committee of finance ministers headed by Sushil Modi, finance minister of Bihar, had recommended uniform floor rates. This would result in tax buoyancy, help the common man besides prev-enting migration of trade from the state.
The chamber has also demanded fixation of 5 per cent VAT on all industrial inputs. Presently, they are charged at 14 per cent except enlisted inputs used in the packing materials that are charged at 5 per cent. The industry has also demanded timely refunds to the traders by 36th day as per the law, so that it could be reinvested in the business, which will lead to higher revenue generation for the government, Manohar added.

The FKCCI has also urged the chief minister to continue with the exemption on food grains, pulses and wheat products.

With regards to the tax rate on p[etrol and diesel, it says, The rate of tax on Petrol and Diesel is high when compared to Maharashtra and Andhra Pradesh states. This disparity in rates of taxes has resulted in diversion of trade to neighbouring states. Therefore the rate of taxes should be at par with neighbouring states. This will result in additional revenue to the Government, K Shiva Shanmugam, senior vice president, FKCCI said in the memorandum.

Due to lower rates prevailing in neighbouring states of Kerala, Puducherry etc, the higher end new vehicle purchases and registration is taking place there and besides vehicle tax our state is losing 14 per cent KVAT on vehicle sales also. Hence rates adopted by neighbouring states be followed to prevent trade diversion. Presently, states like Kerala and Puducherry charge 5-8 per cent on purchase of motor vehicles.

Among other demands, the FKCCI has sought reduction of APMC cess from 1.5 per cent to 0.5 per cent and extend the payment of APMC cess to one month instead of weekly payments.

The chamber has also demanded the modernisation of checkposts and crosscheck the documents collected at the checkposts regularly in order to prevent revenue loss to the government. These measures will enable the government to increase the revenue and also promote healthy trade practices in the trade and industry, the memorandum added.

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