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Industry seeks VAT panel intervention on Kerala move
K.R. Srivats
New Delhi
April 17
Corporate India has urged the Empowered Committee of State Finance Ministers on value-added tax (VAT) to persuade the Kerala Government to reconsider its move to impose VAT on the maximum retail price (MRP) of products sold in the State.
Although this move has been touted as an "option" for manufacturers' at this stage, India Inc has opposed it, stating that levy of VAT on MRP goes against the inherent spirit of VAT that requires collection of tax at each point in the value chain.
Faced with prospects of increased tension between the manufacturers and dealers, industry chambers such as Assocham have sought VAT panel intervention on this issue.
"We have represented to the Empowered Committee. We want the Kerala Government to reconsider this move," Mr D.S. Rawat, Secretary General, Assocham, told Business Line.
Industry has described this move as a retrograde step in the context of the ultimate shared goal of having uniform practices and procedures across the country and also in the milieu of introduction of a goods and services tax (GST) by 2010.
Industry insiders claim that the Kerala Government proposal may substantially relax documentation requirements for the subsequent dealers in the distribution chain and may encourage incomplete accounting of transactions.
Some of them even contend that the proposal to levy tax on MRP basis would result in price inflation as it encourages dealers to sell products at MRP.
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