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Industry concerned over cess on VAT

KOCHI: The Confederation of Indian Industry (CII) has appreciated the State budget’s focus on social security schemes and welfare schemes for the unorganised sector. It welcomed the restructuring of the Kerala State Road Transport Corporation (KSRTC) and writing off of its financial liabilities to the tune of Rs.700 crore.

CII Kerala chairman Umang Patodia said the outline for promoting the public-private participation model for development of Kannur airport and a few other projects indicated a shift in the fundamental policy of the government. He termed it as a very positive step. The move for revitalisation of public sector units was a very strong measure, he said.

However, he expressed concern over the cess on Value Added Tax (VAT). “There should be no tinkering with VAT,” he said.

The move would be counterproductive at a time when the country was moving towards a centralised taxation scheme, he said.

He also opposed the proposal to set up a PVC factory at Chavara. The government was not meant to run business, he observed.

The Finance Minister should have a re-look if funds were not allocated for Kochi Metro.

The government should provide essential financial support to the much awaited project, he said.

A. Gopalakrishnan, convener of the economic panel of the CII, said that one-time settlement for clearing tax arrears was a good proposal. He also welcomed the tax compounding scheme for gold merchants. He also expressed concern over the cess on VAT. The principle behind VAT should not be violated. Even if the cess was only 10 paise on Rs.1,000, it should be avoided, he said. He also resented the proposal for 10 per cent surcharge on large-scale retailers.

Mr. Gopalakrishnan welcomed the support for trade fairs saying that Kerala should attract investment to make it an international destination for shopping. He suggested that Kerala State Electricity Board be made a commercial entity by launching an initiative similar to the one announced for KSRTC.

Navaz Meeran, former chairman of CII Kerala, said the proposal for private participation in the Kannur airport project signalled a significant change in the policy towards private investment.

It would help improve the infrastructure of the State, according to him. The KSRTC had got an opportunity to run on commercial lines, earning profit.

The writing off of interest arrears would enable the corporation to take fresh loans, he pointed out.

Mr. Meeran expressed strong opposition to the proposal for launching a PVC unit at Chavara, saying that the government’s job was not running a business.

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