Tamil Nadu Pre-Budget meeting on March19

Indian Chamber wants TN Govt to slash VAT on cotton and yarn

GMT 20:06 2015 Friday ,20 March

Sriyadithatextile - Indian Chamber wants TN Govt to slash VAT on cotton and yarn

Tamil Nadu Pre-Budget meeting on March19
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Coimbatore, March 20:  

The State Government should cut the value-added tax levied on cotton, cotton yarn and synthetic yarn to 2 per cent so as to safeguard the interests of the spinning sector and the livelihood of workers dependent on them, according to the Indian Chamber of Commerce and Industry, Coimbatore.

It also wants the government to liberalise the mode of payment of VAT as the current system of E-payment of VAT is "cumbersome".

In a representation made at a pre-Budget meeting on March19 convened by the State Government with the representatives of trade and industry associations on tax issues, D Nandakumar, President, ICCIC, pointed out that Tamil Nadu accounted for about 55 per cent of the country’s spinning capacity. With the state’s cotton production inadequate to meet the demand, the spinning mills had to procure cotton from other States and transport it which pushed up their production cost compared to neighbouring States.

He said while Tamil Nadu levied a 5 per cent ST on cotton yarn sales, sale by mills from other States in Tamil Nadu attracted only 2 per cent CST, giving them significant price advantage. He pressed for a cut in VAT on cotton, cotton yarn and synthetic yarn to 2 per cent to protect the local industry and also the livelihood of the huge workforce dependent on it.

The ICCIC President pointed out that the procedure for E-payment of VAT has been found to be `very cumbersome’ by the assessees. To make the process easier, he suggested that the government should consider allowing payment through other options like RTGS / NEFT, through post offices and by a/c payee cheques etc.

Nandakumar said the state was levying uniform VAT of 5 per cent on water handling pumps- centrifugal, monoblock and submersible pumpsets in particular and 3 HP and 5 HP pumpsets in general. However, now the state authorities are asking for payment of a higher VAT of 14.5 per cent for borewell compressor pumps in the power range of 1 HP to 2 HP.

He said the borewell compressor pumps did the same job as other pumps-lifting water particularly from much deeper sources. Coimbatore has more than 150 manufacturers and borewell compressor pump was classified as a "pump" by the Central Excise department. The state’s Commercial Tax department also had accepted it as a water lifting pump since 1989 and the taxed it accordingly. He urged that borewell compressor pumps be charged VAT only at 5 per cent.

The other issues highlighted by him included removal of discrimination between local and interstate sales with respect to capital goods, reduction in VAT for LED lamps/tubes to 5 per cent from 14.5 per cent, withdrawal of amendments restricting input credit to 2 per cent from 5 per cent which hit the spinning industry etc.

The Tamil Nadu Chief Minister O Panneerselvam chaired the meeting attended by M C Sampath, Minister for Commercial Taxes and Registration and officials from departments of Finance, Commercial Taxes etc.

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