Chambers of commerce rue increase in VAT rates

Our Bureau Hubli | Updated on February 27, 2011 Published on February 27, 2011


Welcome agri-budget, disappointed at N. Karnataka being ignored, again

Chambers of commerce in Karnataka are upset over the increase in value added tax (VAT) rates from 13.5 per cent to 14 per cent.

Chambers earlier in the month during the pre-budget consultations had recommended reduction in VAT rates, but to their surprise the Chief Minister, Mr B.S. Yeddyurappa, has taken a sudden U-turn.

Mr N S Srinivas Murthy, president, Federation of Karnataka Chamber of Commerce and Industry (FKCCI), said: “We had represented for reverting tax rate of 13.5 per cent to 12.5 per cent and 5 per cent to 4 per cent whereas the tax rate of 13.5 per cent has been increased to 14 per cent, which might reduce the trading in the State, resulting in demand and tax loss. The other administrative aspects are favourable to dealers.”

Commenting on the budget, the Karnatak Chamber of commerce and Industry (KCCI) said by tinkering with VAT rates the Chief Minister had increased the burden on the “common man.” He has also violated VAT regulations by hiking rates from 13.5 per cent to 14 per cent and has urged him to take remedial steps during the discussion on the budget.

Tax Structure

FKCCI welcomed the tax structure and continuing tax exemption on rice, wheat, pulses, and their products and exempting coconuts from the tax purview. Reducing the rate of tax on all kitchen utensils from 13.5 per cent to 5 per cent, and on school bags to 5 per cent for a price of up to Rs 500, was also appreciated.

FKCCI also welcomed the Chief Minister's move to support trade and industry for the buoyancy in tax collection and assures him the same support would be extended. With regard to entry tax, he should have brought it down, particularly on the petroleum products, which could have helped in controlling the inflation.


The Chambers welcomed the proposal of the State Government to provide support for small and marginal farmers by providing subsidy in procuring farm equipments, drip irrigation/sprinklers, crop loan at 1 per cent, which would help in developing the economic status of the weaker section.

The move of the Government to hold an Agri-Business Meet to attract investments in agriculture and its infrastructure is expected to catalyse and strengthen the growth of agriculture and allied industries.

The special focus for incentivising rural and cottage industries by providing skill training to the artisans, development of apiary, support for increasing the horticulture produce and floriculture, focus on development of sericulture, rejuvenation of saline and brackish lands in command areas of major and medium irrigation and most importantly rejuvenation of the tanks will definitely pave way for the overall economic development in the rural areas.

The President of KCCI, Mr M.C. Hiremath, Vice-presidents Mr Mohan Tenginakai, Mr Vasant Ladwa and Mr Ashok Nilogal, and honorary secretary Mr K.D. Kotekar, in a joint statement said the budget was disappointing with regard to infrastructure, tourism development and projects concerning north Karnataka.

For the second successive year, the Chief Minister had failed to take into account the demands of the people of the region, they said. No steps had been proposed to attract information technology industries to Hubli and Belgaum, they added.

Belgaum Chamber of Commerce and Industry (BCCI) president, Mr Jaideep Siddannavar, said: “The budget is ‘Unscientific.' We totally oppose the State budget for it is totally for Bangalore city development only. There is no scope for Belgaum city. The city very badly needs ring road and other infrastructure development.”

However, the FKCCI said: “We are glad to note that implementation of the long pending requirement of industry, industrial housing, industrial plots/shed in industrial areas for micro and small enterprises, fund for the establishment of the industrial clusters, setting up of GTTC in Bijapur and Gulbarga and establishment of multi skill development centers at Gulbarga and Bangalore.

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Published on February 27, 2011
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