The Hindu Business Line : VAT: TN trade favours constant interaction

Some reactions
Mr Jayavarthanavelu, Chairman, CII, Tamil Nadu State Council, said the move to implement VAT would do a lot to increase investor confidence and help industries in Tamil Nadu increase competitiveness
Mr Ahmed, Chairman, Tamil Nadu State Council, FICCI, said the Government must consult chambers of commerce and industry on the administrative and procedural issues while implementing VAT

Chennai , July 23

With the Tamil Nadu Government announcing its decision to switch over to a value-added tax (VAT) system from January 1, 2007, trade and industry bodies are happy that the uncertainty over whether the State would shift to the new system has ended.

They are now hoping that the Government, particularly the tax administration authorities, will sit with industry and trade representatives and thrash out the modalities for a smooth change.

Trade and industry bodies have been unanimous in welcoming this announcement— an industry leader described it as the most eagerly awaited announcement in the entire budget. Even in pre-budget interactions, they had asked to switch over to VAT and had said more delay in adopting the new system would make Tamil Nadu uncompetitive, especially as a manufacturing destination.

Smooth transition

Industry leaders say that there now has to be constant interaction with the Government to ensure that there is no scope for even a re-think on the move. Also, all concerned have to sit together and use the six months available before the new system comes in to work out a smooth transition.

In his post-budget briefing, the Finance Secretary, Mr K. Gnanadesikan, admitted that there was pressure on the Government to switch to VAT from all concerned, barring a small section of traders. The Government had addressed the worries of this segment by exempting traders from registering and paying tax under the State Act up to a threshold limit of Rs 10 lakh. The Government will now have to introduce a Bill in the Assembly and get it passed to enable VAT to come into effect.

Mr Sanjay Jayavarthanavelu, Chairman, Confederation of Indian Industry, Tamil Nadu State Council, said the move to implement VAT would do a lot to increase investor confidence and help industries in Tamil Nadu increase competitiveness. He welcomed the decision to constitute a special task force headed by the Chief Minister to address industry's problems.

Mr M. Rafeeque Ahmed, Chairman, Tamil Nadu State Council, Federation of Indian Chambers of Commerce and Industry, wanted the Government to consult chambers of commerce and industry on the administrative and procedural issues while implementing VAT. He was optimistic that it would be possible to move towards a unified goods and services tax by 2010, which would make the industry competitive.

Welcoming the Government's decision to upgrade the hosiery town of Tiruppur into a municipal corporation, Mr A. Sakthivel, Chairman, Federation of Indian Export Organisations, southern region, said the decision to improve the road infrastructure in Tirupur would help the hosiery town.

Mr D.E. Ramakrishnan, President, National Confederation of Small Industry, welcoming the budget, wanted the interest rate on loans up to Rs 10 lakh be reduced for small and tiny sectors, as was done for crop loans. The differential interest rate of 2.5 per cent, wherein funds are available at the rate of 9.5 per cent from out of the SME fund should be met by the State Government.

He wanted the proposal of terminal markets for agricultural produce to be replicated for the small-scale and tiny sectors.

The All India Skin and Hide Tanners and Merchants Association welcomed the introduction of VAT, as it would contribute to the competitiveness of the industry in the domestic and export markets. The constitution of a special task force for industry-government interaction will strengthen the industry.

The formation of a welfare board for footwear and tannery workers will benefit five lakh labourers most of whom were women, the association said.

The Madurai Oil and Oil Seeds Association's representative, Mr V. Krishnamurthy, thanked the government for exempting edible oils from sales tax and also wanted the Government to clarify whether this would also apply to vanaspati. too.

The Madras Chamber of Commerce and Industry welcomed the proposals to introduce VAT, do away with resale tax and consult industry representatives on plans to promote industry.

The Southern India Chamber of Commerce and Industry said that the announcement on introducing VAT is a major relief to industry and manufacturers. It welcomed the proposal to set up task forces for formulating a new industry policy and information technology.

`Industry friendly'

The Federation of Associations of Small Industries of India- Southern Region and The Tamil Nadu Small and Tiny Industries Association described the budget as an industry friendly budget and welcomed VAT introduction. Other welcome features in the budget include: revival of capital subsidy scheme in backward areas, constitution of a special task force for industry representatives and government officials to interact regularly, exemption of stamp duty for tiny industries in registration of mortgage and pledged documents and extending set-off for LDPE and PP granules.

The Andhra Chamber of Commerce and the Hindustan Chamber of Commerce described VAT introduction as a progressive and welcomed the move to introduce a `Samadhan' scheme for expediting tax disputes and recovering arrears. The chamber urged the Government to circulate the draft VAT scheme early to give the industry and trade time to study the provisions.

The Industrial Estate Manufacturers Association and the Chennai District Small Scale Industries Association also welcomed the proposal to introduce VAT and the other industry friendly measures including revival of capital subsidy, new industrial policy and formation of an industry-Government task force.

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