VAT in MP must be in line with other states: CII

The Confederation of Indian Industry (CII) Madhya Pradesh chapter has urged the government to do away with discrepancies and anomalies in the recently-introduced value-added tax (VAT) system.

In a meeting with Chief Minister Shivraj Singh Chouhan on the forthcoming industry policy, and later with senior government officials, Sunil Chordia, chairman, CII (Madhya Pradesh chapter) said, "While policy changes have been effected in Madhya Pradesh, there is still a strong need to strengthen implementation and removal of anomalies."

The CII has said that in order to break the VAT chain, governments of some states have allowed industry to charge tax on the bill and not deposit it to help them with exemptions.

"Madhya Pradesh, however, converted all the exemptions into deferments, which are hardly of any use under the VAT regime."

Raising another VAT-related issue, Chordia pointed out that in a number of industries, diesel was used as a support fuel in the generation of electric energy for captive consumption.

In the absence of input credit, industries will purchase diesel against 'C' form before payment of central sales tax at the rate of two per cent and the state will lose substantial revenue. Therefore, input credit should be allowed on diesel used for captive power plant at a rate above four per cent.

The CII, in a meeting with officials, asked for multi-point taxation, rationalisation of stamp duty and property tax, continuation of sales tax exemptions and removal of anomalies in the value-added tax system, imposed in the state from April 1 this year.

The CII Madhya Pradesh chapter said tax exemption to industrial units should continue in the state, while levy of entry tax on industrial units, situated outside municipal limits, is unjustified and remission of tax and continuation of exemption to new units is necessary for the growth of the industry.

Sunil Chordia, chairman, CII (Madhya Pradesh chapter), also pointed out that municipal tax and stamp duty in the state were high. OP Rawat, principal secretary, chief minister's office, reassured them of the state's commitment to speedily resolve the issues.

Rawat said the department of commerce and industry would be the nodal agency for the industry and would facilitate solving problems created due to lack of co-ordination amongst various government departments.