U'khand opposes raising VAT limit

The Uttarakhand finance department today said it was not in a position to concede the demand of the business community for increasing the threshold VAT limit from Rs 5 lakh to Rs 20 lakh.

The development comes a day after Chief Minister B C Khanduri assured the business community in Haldwani that he would look into their demand on sympathetic grounds, official sources said here today.

Indian Industry Association President Pankaj Gupta has also sought clarification from the chief minister whether any such move is being contemplated, saying the step would be “suicidal” for the economy of the hill state, which has meagre revenue resources.

Commenting on the chief minister’s reported statement, a top official said the threshold limit of Rs 5 lakh was in consonance with the national consensus on VAT. Any such increase would jeopardise the budget of the hill state, which is already reeling under the burden of the Sixth Pay Commission.

The Uttarakhand government recently decided to implement the new pay committee report that increases the salaries of its employees by 25 per cent and pensions by 40 per cent. The acceptance of the new wage report would put an extra burden of Rs 1,000 crore every year on the state exchequer. This year, the burden would be Rs 744 crore for salaries and Rs 284 crore for pensions.

“Since we are already reeling under huge financial burden, we will oppose any increase in VAT limit as and when the issue comes up,” said the official.

Meanwhile, Khanduri has also announced setting up of a new committee “Vyapar Mitra” to ensure better coordination between the business community and the government.