VAT ice refuses to melt in Kashmir

Various organisations of the Kashmir valley related to trade and commerce are still holding out against the value-added tax (VAT).

While strikes and Kashmir bandhs are being observed routinely to express anguish at the new tax regime, representative bodies for various trades and industry have started approaching authorities, seeking to put the implementation of VAT in abeyance.

The Kashmir Manufacturers' Association (KMA) feels under VAT the manufacturing cost for the local entrepreneurs would increase manifold. "It will have an adverse effect on the local industry," the association in a statement here said.

The statement said that since most of the raw material comes from other states, the final products or the finished goods would become uncompetitive in the national market.

The statement said that costs of manufacturing in Kashmir were already high due to various reasons and thus VAT would wean away the customer. "They will prefer to purchase products from other states where costs of manufacturing are much lower than our state," the statement said.

Underlining some other problems, the statement said due to many other factors manufacturing costs increase manifold. With an unreliable and erratic power supply, an inhospitable environment, poor roads, dependence on raw materials from outside, high costs of transportation, etc. the finished product becomes highly uncompetitive for the national market.

The statement added that the government should take all these things into consideration and have a rethink on the implementation of VAT on in Kashmir. Kashmir-based industrialists have also suffered colossal losses during the last 15 years of militancy in Kashmir and at a time when the government should have thought of giving incentives to the local entrepreneurs they have come up with the cruel VAT," the statement said.

Meanwhile, an association of Kashmiri carpet and shawl dealers in Karnataka has also expressed its disappointment at the decision of the Karnataka government imposing 12.5 per cent value added tax (VAT) on handicrafts.

In a representation to the commissioner of commercial taxes, Karnataka, on March 26, the association sought a review of the VAT rate on handicrafts. In another representation to the state chief minister, Mufti Muhammad Sayeed, the association sought his intervention.

Underlining many a difficulty the Kashmiri carpet dealers in Bangalore face, the association has urged the chief minister to take up the issue with the government of Karnataka as well as the empowered committee of the state finance ministers in Delhi and recommend exemption of handicrafts from VAT and its subsequent placement under sales tax regime.

The association, which is affiliated to the Federation of Karnataka Chamber of Commerce and Industry and Kashmir Chamber of Commerce and Industry (KCCI), has said that charging 12.5 per cent VAT on handicrafts will not be 'fair' because it involves the employment of a large number of poor artisans.

Earlier, in its support to the Kashmir Association, the KCCI in a representation to the commissioner of commercial taxes, Karnataka, said "handicrafts in Kashmir is a decentralized sector run in tiny cottage units."