Nullify VAT on electrical appliances: ASSOCHAM

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New Delhi, Mar 13: Value Added Tax (VAT) on electrical appliances must be reduced to zero per cent from the present 10 per cent, in order to obtain 40 per cent energy efficiency throughout the country, the Associated Chambers of Commerce and Industry (ASSOCHAM) said today (Mar 13, 2006).

The Chamber has called for a reduction in VAT in electrical appliances such as CFLs, electronics chokes, energy efficient tubelights, solar heaters and solar lighting.

ASSOCHAM, in a Paper brought out on 'Implications of VAT on Energy Savings Appliances', has also recommended that VAT should be increased to over 16 per cent on electric appliances that consume more energy for domestic and industrial use like copper chokes, GLS lamps and regular tubelights, to enhance the penetration of energy efficient products that consume lesser energy as identified above.

Releasing the Paper, ASSOCHAM President Anil K Agarwal said ''all the state capitals should request the central government to only sell the 'Petrol-Alcohol' Mix with 22 per cent alcohol as in Brazil, and 5 per cent low sulphur bio-diesel in the larger cities, to take a lead in the environment area as in the case of CNG buses and scooters.'' The chamber paper also points out that a reduction of VAT on electrical appliances to zero per cent, will enhance their sale substantially and help both the domestic and industrial electric power user to save around 40 per cent energy throughout the country.

Similarly, the Chamber says that increasing VAT to over 16 per cent on electric appliances that consume much more energy from the existing level of 10 per cent, will discourage their manufacturers to produce electric appliances such as copper chokes, GLS lamps and regular tubelights, thereby bringing down their sale automatically.

The paper also highlights the need for setting up a dedicated website by the name of ''UJRA''to be designed for consumer awareness and interaction with equipment manufacturers, giving them details on energy consumption levels, choice of products, procedures and related subjects.

Besides, the paper also seeks equity in the tariff structure for both domestic and industrial manufacturers on the lines of Kolkata, as Delhi rates are very competitive.

Domestic rates in Delhi for power for first 200 units are charged at Rs 2.20 per unit. Above 200 to 400 units, the power tariff structure in Delhi goes up to Rs 3.60 per unit and exceeding 400 units, the tariff goes further higher and is charged at Rs 4.10 per unit.

In Kolkata, however, its electricity board charges per unit consumption at Rs 2.08 per unit, upto consumption of 25 units.

The beneficiary for free electricity in large cities like Delhi, Kolkata, Chennai, Hyderabad, Mumbai, Uttar Pradesh and many other states must be metered, and electricity to them accounted for them as subsidy to keep a check on illegal usage, the Chamber said.

UNI

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