CM urged to cut tax on hardware

The Karnataka Hardware and Allied Merchants Association (KHAMA) has urged chief minister B S Yeddyurappa, who will be presenting the state budget on July 17, to cut the tax rate on all hardware and engines from the present 12.4 per cent to 4 per cent "" a move that would enable Karnataka to be on a par with states that collect a uniform value added tax (VAT).

In a charter of demands to the CM, the association has pointed that the difference in the rate of taxes has resulted in a diversion of business from Karnataka to other states. The association, however, has not quantified the extent of diversion.

 

Pointing to the 4 per cent VAT being collected on hardware in Andhra Pradesh, Kerala, Delhi and Haryana, KHAMA's taxation committee member B K Goyal said: "When VAT was introduced we were informed the rate of tax would be similar in all states. But we are yet to understand why dealers in Karnataka have to pay 12.5 per cent while other states levy only 4 per cent."

Khama has suggested for the reduction of VAT on all kinds of wire products like wire nettings, chain link mesh, perforated sheet netting, barbed wire, agricultural engines and, petrol, diesel and kerosene engines.

KHAMA also requested the CM to add new products to the list of industrial inputs. The list needs to be reviewed and updated periodically, Goyal said, adding the products to be added to the list are industrial valves and pressure gauges used in dairy, pharma and paper industry; ball valves, pneumatic products, tubings and accessories used in machine tool, food processing and automobile industries; gasket sheets in pharma and sugar industries; synthetic resins, liquid adhesives, spray guns rubber-based adhesives; hardware used in furniture industry; generators; engineering plastics; hand-barrel pumps; tool boxes and rice mill and floor mill machinery and spares.

With regard to filing returns, KHAMA has requested the government to reduce the penalty for delayed filing of monthly VAT returns to a flat Rs 100 till the month-end and charge an interest of 12 per cent per annum on the tax dues thereafter.

The association also demanded the scrapping of annual returns by asking: "What is the need for filing annual returns when the tax period under VAT regime is one month?" The government has also been asked to restore the earlier system of filing C Forms on an yearly-basis so that it saves time for dealers and reduces pressure on the department of commercial taxes.

KHAMA also favoured increasing the time limit for filing revised returns and issuing debit notes, credit notes and goods returns from the present six months to 12 months. Only the interest on the tax due should be levied and no penalty should be collected from the dealer, KHAMA said.