The Union minister of commerce, Ramakrishna Hegde, will call on chief ministers of all states to take a view on the rates of taxes on goods and commodities. The minister will shortly write to the finance ministry on the issue so that a joint view could be taken.
The move is to ascertain the actual revenues which would be due to each state and on the other hand also ensure that there is no evasion in payment of taxes. Hegde was addressing the diamond gold jewellery industry.
The need to streamline the process of collections has come up after several raids were conducted by the state government's sales tax department against the diamond exporters under the presumption that they are selling diamonds in the local market.
"Officers of the central and state government must keep this in mind that revenues will not increase in the same rate at which taxes are. We must ensure that rules and regulations are specific so that there is no wrong interpretation of the rules. As part of this measure, we are computerising the necessary departments so that information flow is swift and accurate,'' Hegde said. "I support the need for a review on the sales tax which is imposed on the diamond industry,'' Hegde said. He stated that there was little meaning in merely providing a package of measures and hoping that exports would improve.
Exports growth depends on the competitiveness of Indian goods - in terms of pricing, delivery and packaging. Here infrastructure bottlenecks and procedural confusions do affect the flow, he added.
The diamond industry contributes $ 4. 5 m in terms of foreign exchange earnings for the country and the Indian diamond exports industry controls as much as 80 per cent of the trade in terms of volume and 40 per cent in terms of value.
Meanwhile, the Maharashtra finance minister Mahadeorao Shivankar has promised to look into the matter of the raids which were conducted by the government's sales tax department against the diamond traders. The industry had then undertaken a one-day strike on September 10 in protest demanding relief.
The minister said that action had been initiated against only some traders who they felt were coming under the VDIS scheme. The trade has now demanded that even if action is to be initiated this could be done through a proper notice.
"There must be some relief on the sales tax structure considering that there is sales tax imposed on local sales of finished jewellery and this should not be imposed on loose diamonds," he said.