Karnataka to Look Into Reducing VAT Rates | SupportBiz

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Karnataka to Look Into Reducing VAT Rates

 
In response to a request made by the office-bearers of the Federation of Karnataka Chamber of Commerce and Industry (FKCCI) seeking reduction in value added tax (VAT) rates by 0.5 per cent, state Chief Minister Siddharamaiah has assured the trade body to look into the possibility, reports Business Line.

Bangalore, December 9: The earlier BJP government has increased VAT rates by 0.5 per cent from the then existing 5 per cent and 14 per cent to raise Rs 3,600 crore to enable waiver of agricultural loans. The erstwhile government had assured the industry to restore the old rates from August 1, 2013. However, with the end of BJP government in the state, the industry found itself under uncertainty on whether the current Congress government will reduce the rates or not and hence sent a request to restore previous rates.

FKCCI had also urged the Chief Minister to reduce VAT rates to 2 per cent on industrial inputs, capital goods and sought exemption of entry tax on machinery and capital goods. “This will cut cost of manufacturing and make Karnataka competitive state,” the Chamber said.

In reply, Karnataka CM Siddaramaiah said, “I will definitely look into it, but not this financial year. The state has set a revenue mobilisation target of Rs 37,740 crore. At the end of October, we have achieved collection of Rs 20,166 crore.” He further added, “I know this is a difficult year for you (industry). In this difficult year, we are barely managing to meet the target. Hence, I will be able to address your concern only next year.” Stating that, he was busy with the issues prevailing in the social sector, Siddaramaiah now vowed to focus on industry and employment creation. Production of 4,000 MW of power to enable industries achieve better output is one such step that the government plans to take.

R. Shivakumar, president of FKCCI, urged the Chief Minister to concentrate on the manufacturing sector, especially SMEs. He also requested for concession in purchasing land to build FKCCI skill development centre at Dobaspet. “Since the prevailing rate of allotment is Rs 1.5 crore per acre, we request you to give it to us at a nominal 10 per cent, instead of 50 per cent fixed by KIADB.”

S. Sampathraman, senior vice-president, FKCCI, urged the state government to look into abolition of trade licence too.