Deferred VAT creates uncertainty

Even after the presentation of the state Budget for 2005-06 by the state finance minister Vajubhai Vala on Friday, the industry, trade and commerce in Gujarat are still uncertain about the implementation of the value added tax (VAT) and seek a clear stand by the state government.

"The finance minister has taken a pause so far as VAT is concerned. The state is ready to implement the new VAT regime if only all other states do it. This has again created uncertainty which should be removed at the earliest," Chinubhai Shah, president, Gujarat Chamber of Commerce and Industry, told Business Standard on Friday.

Even Dilip Chasmawala, vice-president, South Gujarat Chamber of Commerce and Industry (SGCCI), expressed similar views on the VAT issue.

He said, "A white paper on VAT has been released by the central government, and it should be implemented from April 1 this year. The finance minister should have taken a positive stand and avoided making a statement regarding possible deferment of the new tax regime in his Budget speech."

Industry has also been disappointed with the Budget which has remained silent on certain vital issues such as octroi and stamp duty. Abolition of octroi has been a constant demand by the state industry. The trading community was expecting an abolition of octroi in a phased manner.

However, the industry appreciated the steps taken by the finance minister for the reduction in the electricity charges. "We had over the years demanded reduction in electricity charges and at last the finance minister has conceded to the demand by reducing the charges across the board," said Shah.

Amit Goradia, chairman, Federation of Indian Chambers of Commerce and Industry (Ficci), said, "The impact of the Budget on the state's economy would be positive. The allocation of Rs 11,000 crore for the annual development of the state for the year 2005-06 will boost the economy of the state."

The Confederation of Indian Industry (CII) also welcomed the Budget, and appreciated various measurers introduced such as relief in electricity charges, removal of CNG kits from sales tax net and progressive decrease in the revenue deficit.

"We appreciate the cut in power duty from 45 per cent to 35 per cent. The government took the right step," said Jayesh Shah, director and chief financial officer, Arvind Mills, while commenting on the Budget.

"The removal of sales tax on the CNG kits will go a long way in promoting the use of environment-friendly fuel in the state. This would ultimately lead to a cleaner environment resulting in a healthy environment for the people and reduced public health expenditure," said B S Shantharaju, managing director, Gujarat Gas Co Ltd, while welcoming the Budget.