Our Bureau

Hyderabad, Jan. 24

THE Confederation of Indian Industry (CII) has called for phased removal of Central Sales Tax (CST) to pave the way for a real uniform regime of Value Added Tax (VAT) across the country.

In its pre-Budget memorandum to the Andhra Pradesh Government, the CII has called for efforts to phase out of the CST in the next two years - from 4 per cent to 2 per cent in the first year and from 2 per cent to 0 per cent in the second.

"A single VAT with no CST, octroi and entry tax is the best option," Mr M.K. Patodia, Chairman of CII's Andhra Pradesh Chapter, said.

The memorandum was submitted to Mr K. Rosaiah, Minister for Finance and Health, last week.

It asked the State Government to remove the Entry Tax of 12.5 per cent imposed on 12 items like caustic soda, chlorine, hydrochloric acid and sulphuric acid with effect from October 15, 2005.

"We appeal to the Government to remove this tax as it goes against the very purpose of implementing VAT - that is to remove anomalies in taxes," it said.

The Chamber also appealed to the Government to bring vital industrial inputs, which were under the 12.5 per cent slab, into the 4 per cent category.

Input tax credit should be allowed on fuel or coal used for captive power generation as well as on capital goods purchased for setting up captive power generation plants. It was desired that medical devices, implants and disposables came under the four per cent category as in most other States.

The CII said that the services sector in the State showed a robust performance, contributing 49.16 per cent of GSDP (Gross State Domestic Product) at Rs 98,057 crore.

(This article was published in the Business Line print edition dated January 25, 2006)
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