| The consumer durable industry, unlike the FMCG industry, has claimed that value-added tax has had negligible impact on its margins.
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| “Mass production of consumer items is centred close to Delhi— either in Uttar Pradesh, Rajasthan, or Madhya Pradesh—which are all non-VAT states. Hence, not getting input credits is not a big issue in this sector,” said a Samsung India executive.
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| Leading manufacturers like LG and Samsung also claimed that problems at the retail level were sorted out in March, and that sales in April had increased to almost 30-40 per cent compared with the last year.
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| However, the sector is unhappy because inputs for consumer durables have not been classified under the list of industrial inputs, which attract 4 per cent VAT. Currently, inputs for consumer durables are in the 12.5 per cent VAT category.
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| “It will be better for both industry and the government that refunds are avoided. The 4 per cent rate prescribed for all industrial inputs, either through an exhaustive list as per the excise and Customs tariff, or through all industrial inputs and packing material, should be rated at 4 per cent after being subjected to a declaration form, which has been adopted in Haryana,” said a representation sent by the Consumer Electronics and Television Manufacturers Association (Cetma) to the finance ministry.
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| Cetma contended that units which were enjoying the exemption under various states schemes, might end up with a lot of input tax credit in their books, which as per the VAT white paper, shall be eligible for refund at the end of the second year.
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| “This period is too long and a lot of funds of the industry will get stuck up. The refund duration should also be fixed. It should be available in 2 to 3 months time from the date of filing of the same, or a periodical settlement on a quarterly basis,” it added.
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| Almost all the companies said they had maintained uniform pricing across the country and that there had been no price revision on account of the VAT. “Differential pricing will encourage trade diversion and malpractices,” said Salil Kapoor, head (marketing), LG India. |
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