The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) have demanded for reduction of 50 basis points cut in the commercial tax rates from 14.5 per cent to 14 per cent and 5.5 per cent to 5 per cent on goods that fall in the two tax brackets.

In a pre-budget memorandum submitted to the state chief minister Siddaramaiah, (FKCCI) said, "The present rate on notified industrial inputs and capital goods under KVAT is 5.5 per cent and the other industrial inputs which are not notified attracts 14.5 per cent."

"Industrial inputs and capital goods purchased from outside state attract only 2 per cent against "C" Form. We request the government to reduce the tax on inputs and capital goods to 2 per cent procured within the state," the memorandum said. The FKCCI has also requested for exemption from entry tax on capital goods, consumable parts and accessories.The chamber has also sought strengthening of TINXSYS platform in interstate trade.

P V Srinivasan, Chairman, Indirect and State Taxes Expert Committee, Bangalore Chamber of Industry and Commerce (BCIC) said: "The software sector is faced with multiple litigations under the Karnataka VAT laws. The State Government should establish a forum to enable the dealers to present their concerns and arrive at a consensus. This will go a long way in reducing the number of litigations in the State."

He further appealed to the State Government to streamline the law, which should also provide for processing and issue of refunds in a time bound manner.

The Karnataka Small Scale Industries Association (Kassia) has requested the government to restore the 4 per cent interest subsidy scheme for small industries to undertake modernisation and technology upgradation and purchase of machinery to speed up the modernisation process.

The Kassia has also urged the chief minister to reduce the rate of tax from 14 per cent to 2 per cent on items manufactured and supplied by SMEs to government departments, corporations and railways. It has also pleaded for charging industrial inputs at 4 per cent as done in Tamil Nadu and other states irrespective of the end product based on self-certification and presentation of affidavit by the entrepreneur.

The Kassia has also requested the government to reserve at least 20 per cent of all purchases from the government departments for SMEs as done in the Central government.

The FKCCI has also urged the chief minister to create industrial corridors between Doddaballapur and Chikka-ballapur; Chikkaballapur and Devanahalli; Hubli and Dharwad; Mysore and Hassan; Mysore and Bangalore and Hoskote and Kolar.

It has also requested for creation of a new Bangalore on the outskirts of the City with all modern amenities to attract industries and an international airport hub at Bangalore.