The Hindu Business Line : FKCCI calls for educating industry on VAT

THE Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has called for educating trade and industry on the advantages of the value-added tax.

In its pre-Budget memorandum addressed to the Chief Minister, Mr S.M. Krishna, the chamber said training programmes to prepare the State towards migration to VAT system should form part of the Government's tasks.

It should also include removing anomalies in taxation and levies on low tension power consumption, largely small-scale sector units, withdrawal of proposed infrastructure and development cess and a cess on stamp duty and transport vehicles are some of the demands listed by the federation.

FKCCI has pointed out that lack of adequate infrastructure and high cost of power compounded by high commercial taxes have stunted the growth potential of manufacturing sector.

In order to give an impetus to the sector, which could cash in on the current `feel good factor' to strengthen the manufacturing industry's base, the Government should facilitate a congenial tax regime that would help the sector, especially the small scale sector, to reduce its costs and become competitive to improve exports.

FKCCI said that paradoxical situation of declining LT power consumption despite demand due to high taxes and charges has severely affected the industry.

LT power- dependent industries, which are mainly SSI units numbering about 2.92 lakh and with an investment of Rs 5,957.37 crore and employing 1.6 million people have become victims of circumstances beyond their control.

Closure of public sector companies, delayed payment by customers, investment subsidy arrears to the tune of Rs 470 crore, neglect of infrastructure in areas other than cities, unreliable power supply have fostered sickness among SSI units, he added.

Apart from this, FKCCI has also demanded withdrawal of the proposed 10 per cent cess on infrastructure and development cess on commodities in addition to sales tax, cess on goods and transport vehicles, total withdrawal of electricity charge of 50 paise per unit on captive generator sets, instead of reducing it by 50 per cent, reduction of agricultural marketing cess from 1.5 per cent to one per cent, reducing the number of taxes to four from the present nine slabs and abolition of entry tax and luxury tax.

Film industry should be extended the benefits of power tariff and bank loan facility. There should also be a cap on the levy of entertainment at 40 per cent as suggested by the Union Informational Minister, FKCCI said.

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