The Hindu Business Line : Karnataka: `Anomalies in taxation will be removed'

The Karnataka Deputy Chief Minister, Mr S. Siddaramaiah, addressing business and industry representatives at the pre-Budget meeting for 2004-05 at Vidhana Soudha in Bangalore on Tuesday. — G.R.N. Somashekar

Bangalore , June 22

KARNATAKA is preparing itself to meet the deadline of April 2005 for the implementation of the Value-Added Tax (VAT), which is expected to lead to rationalisation of taxes and simplification of procedures that have been the bane of the trade and industry.

Stating this at an interaction with the representatives of chambers of commerce and industry from the district-levels, the Deputy Chief Minister and Finance Minister, Mr Siddaramaiah, assured the businesses that he would study the suggestions and demands made in their pre-Budget memoranda on taxes and procedures for running their businesses.

In his first official meeting with the representatives, Mr Siddaramaiah said though the Government had presented a full-fledged Budget due to the elections for the State Assembly, it had tax levies.

However, he said his Government would study carefully the demands to remove anomalies in taxation in the overall interest of the State's objective of maintaining a steady economic growth with employment generation and providing adequate support to the farming sector. Earlier, in a three-hour interaction, trade and industry associations from various districts of the State and associations representing local shopping centres in Bangalore, harped on the highest taxation and complex procedures for running businesses.

They had sought an immediate relief before the VAT regime to prevent shifting of business to neighbouring Hosur and other centres in the neighbouring States.

The meeting reverberated with the complaint about Karnataka paying the highest commercial taxes, which ranged from 8 per cent to 30 per cent for various commodities as against below 20 per cent in the southern States.

The associations also complained that too many classifications of commodities attracted different rates of tax, affecting steady growth in sales. A local tea traders' association said differential rates of tax on branded, unbranded and tea produced locally affected the business and wanted a uniform rate. Macro issues such as reducing the fiscal deficit to three per cent of the State GDP, incentives for setting up industries in the backward regions and improving infrastructure were raised by bigger organisations such as the Greater Mysore Chamber of Industry, Confederation of Indian Industry (Karnataka), the Federation of Karnataka Chambers of Commerce and Industry and Karnataka Small Scale Industries Association.