The state government has taken a major decision to attract new investment in backward regions of the state. It has decided to give subsidy on gross value added tax (VAT) instead of net VAT. This scheme is applicable for entire Vidarbha and Marathwada, and Nandurbar, Dhule, Ratnagiri and Sindhudurg districts. The announcement was made by chief minister Devendra Fadnavis at a function in Vidarbha Industries Association (VIA). The state government started giving subsidy on gross VAT from 1976 but it was changed to net basis by Congress-NCP government following large number of cases of tax evasion by mega projects. The BJP-Shiv Sena government has decided to revert to the old system but only for backward regions.
Fadnavis said that the government had started the Maitri Cell for giving single window clearance to new units in the state. "This cell will get all the permits for the new industry. Every government agency has to give a time frame for providing a service under Right to Service Act and adhere to it," he said. "Complete computerization of the government procedure for industry will not suffice. It will have to be integrated so that it can be known where a document is stuck," he said.
"Recently, the World Bank ranked the states of India in terms of ease of doing business. Maharashtra came eighth because 40 things were not on e-platform. Now, this has been done," the CM further said.
Earlier, Pravin Tapadia told the CM, on behalf of VIA, the problems faced by industries. "A high power committee should be set up for solving problems of industries as ease of doing business had not percolated to the ground level. Due to environmental clearances, thousands of crores of investment is lying idle at Tadali MIDC. There is a need to create a fund to utilize the NPA assets. There is a wide difference between MIDC rates and the ready reckoner for stamp duty. Appointment of a deputy CEO and legal officer is needed in MIDC's Nagpur office," he said.
HOW VAT WORKS
Suppose a company makes goods worth Rs100 each and pays 10% VAT on it. The raw material worth Rs50 purchased by the company also has a VAT component of 10% (roughly Rs5). In the normal course, the manufacturer claims a set-off on the tax component of Rs5 paid to the raw material supplier, and pays the net VAT liability of Rs5 for his finished goods
Now, under the gross VAT refund scheme, even the component which can be claimed through set-off will be repaid by the state government on filing returns. So, the manufacturer is likely to get a refund of Rs15 immediately