Exporters from Punjab want 1% central sales tax

Exporters of Punjab have high expectations from the Union Budget tomorrow. They want the central sales tax (CST) to be cut to 1 per cent and small-scale units exempted from the fringe benefit tax (FBT).

Talking to Business Standard, the vice-president of the Punjab Chamber of Small Exporters, Ashwani Kohli, said, "The central government should provide relief to industrial units in Punjab by of reducing the CST to bring it at par with the Union Territory of Chandigarh, i.e. 1 per cent. Currently, the central sales tax is at 4 per cent in Punjab."

He said, "In Punjab exporters pay the CST at 4 per cent, plus 1.5 per cent octroi. Moreover, the Supreme Court order banning the overloading of trucks has made costlier the purchase of raw materials and other inputs to the state. On the other hand, materials sent from Punjab to states where the CST is exempted, or the UTs, will be very competitive."

Hand tools and cutting tools exporter Gursharan Singh said, "For promoting exporting small-scale units, it is necessary that they should be exempted from the FBT, and the CST should be reduced to 1 per cent." He said the states enjoying tax benefits were becoming more prosperous while in Punjab the condition of small-scale units was pitiable, and this was of great concern because small-scale units run by technocrats were giving jobs to 8-10 people per tiny unit.

Kohli said small units contributed about 3 per cent in Punjab's exports, which are about Rs 12,000 crore."

With the withdrawal of the freight equalisation policy by the Centre (i.e. throughout India one price of raw material and freight element to be adjusted by the government in duty structure), the cost of raw materials in Punjab is going high.

Kohli said the 2nd Amendment Bill of the Taxation Laws (2nd Amendment) Act, 2005, should be withdrawn.