VAT on chemicals brings relief to the industry

In the Gujarat Value Added Tax (amendment) Bill - 2006, the tax on chemicals is reduced from maximum 12 per cent to four per cent.

Atul Buch, president of Ankleshwar Industrial Association, said, "This step will led the Gujarat-based industries to compete with China."

He also added that after VAT implementation, the cost of production will also reduce.

The chemical industries of the state are now heaving a breather as, the tax on chemicals will be a uniform 4 per cent with the implementation of VAT.

GHCL also welcomed the decision.

"We as a company are geared up to address any such move by the government," said Nikhil Sen, senior GM Finance & Strategy, GHCL Ltd.

In case of implementation of VAT for chemicals across the country, the consumer can claim the credit for VAT against their finished product. We don't see any effect in our scheme of things," he added.

"The uniform implementation of VAT will surely boost up the industry. This move will fulfill the pre-requirements of the industry in streamlining the operations," according to a senior official of Tata Chemicals.

The company has its major soda ash plant in Gujarat, the tax on which, will be reduced from 6 per cent to 4 per cent.

Kirit Patel, president of Vatva Industries Association, said the chemical industry worth of Rs 6,000 crore in Vatva welcomed the decision.

"Earlier several chemicals were charged differently ranging from four per cent to 12 per cent but the rationalising the tax will bring a boom in the chemical industry of the state," added Patel.

Griven Kharawala, president of Gujarat Dyes Stuff Manufacturers Association, said this was a much awaited move.

"We were expecting the tax on chemicals to be leveled at 4 per cent," Kharawala maintained.

Certain products will not be VATable, especially the fuels, which are a major requirement of the industry and are waiting for further notification on it, according to industry sources.

A member of VAT implementation committee of the state confirmed that the prices of industrial fuel will remain at the existing 25 per cent.