MP's entry tax on steel induction units to stay

The Madhya Pradesh government has reportedly rejected the demand of the state's induction furnace units to waive entry tax, which has been raised from 1 per cent to 2 per cent.

Although the cabinet meeting organised yesterday did not disclose its decision on the demand, a government insider said the department of commercial tax had rejected the demand.

Induction furnace units have to pay 2 per cent entry tax on scrap purchase, 4 per cent value-added tax and 2 per cent entry tax on each product, ingots and steel, rods manufactured by them.

Moreover, they pay higher power tariff in comparison to those in Maharashtra and Chhattisgarh.

The state government has raised entry tax from 1 to 2 per cent with effect from March 31.

Succumbing to the cost pressure, four units have shut shop.

These units produce mild steels, low alloy steels, stainless steel, grinding media and special cast iron castings through electric induction melting furnaces.

In its note the department of commercial tax, the association has said higher power tariff was the main reason for the closure of the units and not the entry tax.

SM Jain, the president of the All India Induction Furnace Association (Madhya Pradesh chapter), told Business Standard: "We wanted entry tax waived since we pay one rupee more per unit of power consumed in comparison with the units in Chhattisgarh or Maharashtra."