New Delhi, Oct 29 (UNI) Industry body FICCI has urged the government to come out with a dedicated, time-bound CST withdrawal programme to be completed before 2009 which allows lowering of CST by 100 basis points every six months.
Based on the feedback from CEOs, CFOs, CAs and Company Secretaries of its member companies across states and industrial sectors, FICCI, in its pre-budget suggestions on Indirect Taxes has pointed out that since the intention of the government is to put CST in place from April 1, 2010, it is important that the government must bring all items under the ambit of VAT regime.
A clear direction on the entry tax policy that the states will adopt post CST and how it will merge with VAT, the ceiling with respective upper limits and lower limits rates for various products, documentation that will be required under zero CST and creation of a three-party resource like NSDL which will permit and regulate generation of online forms for inter-state transactions which will be connected to the TIN numbers of assessees.
According to the Chamber, considering this aspect in mind it is suggested that petrol and petroleum products should also be brought under the VAT regime with maximum rate of 12.5 per cent across all states.
However, due to revenue constraints, if it is not possible for the government right now to reduce sales tax/VAT to this level, then at least the differential amongst states should not exceed upto four per cent.
FICCI is of the view that to have National VAT in place, a roadmap should be laid down with total incidence of 20 per cent (cenvat 12 per cent and state VAT 8 per cent).
This will provide the competitive edge to India in the global matrix as well.
The Chamber has stated that with the introduction of VAT, the facility of purchase of inputs within the state at a concessional rate of one per cent has been withdrawn.
This has resulted into unutilised VAT, which will be refundable only at the end of two years and is thereby adversely affecting working capital. It is submitted that inputs for the watch industry are included in the list of industrial inputs taxed at four per cent.
The government should also ensure timely availability of declaration forms so that dealers can submit their forms in time to avoid interest and penalty.
Alternatively, the government should allow dealers to use pre-printed stationery subject to government exercising certain controls to avoid misuse of forms.
Further, Form F, says FICCI, should be made mandatory only where finished goods or bought out items are transferred for the ultimate sale of the same in the state in which they are transferred.
In other words amendment should be made to make Form F applicable only for the transfers of goods meant for further manufacturing or sale in the transferee states.
The Chamber feels it is imperative for the government to do away with the concept of SED altogether in the forthcoming budget and the overall incidence of duty and other levies on manufacturers reduced drastically.
It suggests that the government should reduce the excise duty from 16 per cent to 14 per cent in this year's budget itself.
Sectorally, FICCI has pointed to the need for giving a fiscal booster to industries that have a strong growth, export and employment generating potential.
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