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Tyre dealers ask for parity in tax rates

Staff Reporter

Haryana has done enough damage and in the last two weeks the sales of automotive tyres have dropped by over 50 per cent due to anomalous situation created by the VAT differential between Delhi and Haryana. "Setback to major tax reforms due to inconsistency in VAT''

NEW DELHI: : Claiming that Delhi's over Rs 800-crore yearly tyre trade has been reduced to less than half in the past fortnight due to lower incidence of taxation in Haryana in the aftermath of imposition of Value Added Tax in the Capital, the All India Tyre Dealers' Federation (AITDF) has urged the Empowered Committee of State Finance Ministers on VAT and the States of Haryana and Delhi to bring about parity in tax rates on automotive tyres in tune with the new 12.5 per cent VAT in order to see that Delhi tyre dealers are not put to undue disadvantage in comparison to Haryana.

Stating that inconsistency in VAT is not only adversely affecting the trade but also causing a setback to major tax reforms being carried out at State levels, the convenor of AITDF, S.P. Singh, said the tax variation between Delhi and Haryana on tyres and diesel is merely a case in point and VAT rules would require refinement in days to come to make them really effective and to create a common Indian market.

Averring that tyre trade has never opposed imposition of VAT as it provides them a level playing field across the country, the convenor said AITDF along with other trade bodies will continue to assist the Governments in implementing and improving the VAT system in order to make it trade and consumer friendly.

The Delhi Government, the convenor said, took the right step by bringing Automotive Tyres at 12.5 per cent VAT rate and diesel at 20 per cent rate to maintain the true letter and spirit of the understanding reached by Empowered Committee of State Finance Ministers on Value Added Tax. However, as Haryana had already introduced the VAT last year, and continued to levy VAT on automotive tyres at 8 per cent and on diesel at 12 per cent, ever since the imposition of the new tax regime two weeks ago, the major users of tyres and diesel, particularly truck and taxi operators, have started making purchases of these two items from neighbouring Haryana due to lower tax rate there.

Interestingly, the other neighbouring State of Uttar Pradesh, while continuing the Sales Tax System, has already kept its Sales Tax rate on tyres at 12 per cent in anticipation of VAT rates in other neighbouring States, and so it has not impacted the sales in Delhi.

But Haryana has done enough damage and in the last two weeks the sales of automotive tyres have dropped by over 50 per cent and have left the local tyre dealers shattered due to the shift in business and the anomalous situation created by the VAT differential between Delhi and Haryana.

With three-fourth of Delhi being encircled by Haryana, and diesel and tyres constituting 90 per cent of the operating expenses of commercial vehicle operators, most of them - who anyway pass by Haryana or go there due to their nature of work prefer buying these commodities from there.

And gradually as the word is spreading, even the owners of personalised passenger cars and vans are preferring buying tyres from neighbouring towns.

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