Maharashtra tables VAT amendment Bill

The Maharashtra government has introduced a Bill in the state assembly allowing the state government to grant exemption from VAT on goods and services sold to special economic zones (SEZ) developers or to units located in SEZs.

The discussion on the Bill took place in the assembly on Wednesday and Thursday and it is expected that it will come up for voting on Monday. The Bill which seeks to amend the Maharashtra VAT Act 2005, was tabled in the assembly by the state finance minister, Jayant Patil, last Wedensday.

A senior official from the state finance ministry explained, "The amendment seeks to enable the state government to grant exemptions with regard to goods and services sold in SEZs. However, which goods and services and how much exemption will be granted is subject to state SEZ policy."

The Bill also seeks to reduce the VAT rate on raw material, equipment and machinery purchased by power generation, transmission and telephone service providers from the present 12.5 to 4 per cent, if they buy these items from manufacturers in Maharashtra.

At present, lower rate of tax is available only under the central sales tax on inter-state purchases which has been resulting in loss of business to manufacturers of such equipment and raw material in Maharashtra, the official said.

The amendment for reducing tax on the sale of petroleum products between two petroleum companies is also a part of the amendment Bill and petroleum products will be charged at 4 per cent. The 4 per cent tax will be adjusted when the companies sell to the end user.