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MP traders want 'rationalised' tax
February, 16th 2012

Industries, traders and businessmen in Madhya Pradesh have demanded an immediate rationalisation of the pertinent tax structure in the forthcoming state budget, reiterating that the present structure of levy on various commodities and trade-related activity has rendered heavy losses to the industry in the state.

The MP Laghu Udyog Sangh said on Wednesday that the states producers are suffering owing to a 2 per cent mandi tax and 1 per cent entry tax, besides other taxes like value-added tax (VAT) and central sales taxes. The government must abrogate these taxes or rationalise them, said Dr R S Goswami, president of the organisation. The industry wanted the next state budget to be soft, he added.

Currently, the taxes were choking cottage industries, like bidi making which is a prime employment-generating activity in the backward districts of Bundelkhand region. Whats more, the state has put a VAT at 25.3 per cent on tendu leaves, the key ingredient of bidi, besides a 2 per cent entry tax and 3 per cent forest development cess, Goswami pointed out, elaborating on the plight of the workers in districts including Sagar, Damoh, Jabalpur and Chhattarpur. Further, the state levies VAT at 12.5 per cent on tobacco, which is another ingredient used to make bidis.

The Bidi Makers Association noted that more and more bidi makers were switching over to other jobs or migrating to other states. This is due to losses the industry is facing, claimed Mina Pimplaure, its president. Agarbatti or joss-stick making units are also under the tax net, much to the frustration of the Federation of Madhya Pradesh Chambers of Commerce and Industry (FMPCCI). Why cant the government exempt agarbatti industry, asked one of its office-bearers. Similarly soyabean processors have also demanded that the government should try to ease burden on taxes, particularly mandi tax and entry tax that are putting state soya traders at a disadvantage of 4.41 per cent. Also, the state has imposed stamp duty on mortgage papers used for industrial loans at banks. States like Haryana and West Bengal levy zero stamp duty, while Rajasthan charges hardly Rs 20 on any industrial loan, Delhi charges Rs 100. As for Madhya Pradesh, it demands Rs 5 lakh maximum on any loan or 0.25 per cent of the total loan besides Janpad Panchyat fee.

The FMPCCI said the states government must levy 5 per cent tax on packed flour products like atta and suji to protect the local industry. More importantly there is an urgent need to rationalise electricity duet which are levied at 15 per cent of the total power bills.

Small- and medium-scale units cant survive if power is heavily taxed, according to an official with the federation.

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