New Delhi: The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the Government to bring all items, including petroleum products, under the ambit of the Value Added Tax while withdrawing Central Sales Tax (CST) in a time-bound manner by 2009.

It has also called for fiscal incentives for key industries that may boost exports and employment such as food processing, textiles, cement, pharmaceuticals and the oil and gas sector.

Making a series of suggestions on this issue as part of its pre-budget suggestions on indirect taxes, it has sought a "dedicated time-bound" CST withdrawal programme along with lowering of the CST every six months.

Based on feedback from chief executive officers, chief financial officers, company secretaries and chartered accounts, FICCI has sought a clear direction from the government on the entry tax policy that States will adopt post-CST and how it will emerge with VAT, the ceiling for various products and documentation under zero CST. The chamber has also argued in favour of giving a fiscal boost to industries that have a strong potential to generate exports and employment. These include the food processing, textiles, tyres, cement, pharmaceuticals, electronic hardware and oil and gas sectors.

In a paper released here on Sunday, FICCI has pointed out that since the intention of the Government is to put general sales tax in place from 2010, it is important to bring all items under the ambit of VAT. Considering this aspect, it suggests that petroleum products should be brought under the VAT regime with a maximum rate of 12.5 per cent across all states. However, due to revenue constraints, if it is not possible for the Government right now to reduce Sales Tax and VAT, it feels at least the difference among States should not exceed three to four per cent.The FICCI is of the view that to have a national VAT in place, a roadmap should be laid down with total incidence of 20 per cent. This will provide the competitive edge to the country in the global matrix as well.

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