Industry associations’ wish list of expectations from the Gujarat government has remained rather unchanged for the past few years. Adamant, the state government has ignored the demands of the bodies over the years, relegating them to being no more than a wish list for this year, as well.
On February, state finance minister Nitin Patel will present state budget for 2013-14, from which these associations have high hopes. The Gujarat Chamber of Commerce & Industry, Confederation of Indian Industry (CII), Associated Chambers of Commerce and Industry of India (Assocham) among others have already made presentations of their suggestions for the state to Patel.
Like every year, these industry bodies are expecting the state government to announce implementation of goods and services tax (GST), though the chances are minimal. The second-most wanted wish of the associations is removal of the 2% input tax credit on inter-state sales transactions.
Compared to other states, Gujarat levies one of the highest state taxes on electricity and petroleum products. Last year, however, with focusing on assembly elections, the then state finance minister, Vaju Vala had reduced electricity duty with respect to residence and education categories by 25%, giving the exchequer a relief of nearly Rs200 crore. But the industry bodies suggest that despite this relief, electricity duties in Gujarat are among the highest.
Further, of the total VAT collection in the state, petroleum products contribute 44%. This ratio is among the highest compared to other states. The associations argue that since the central government has deregulated petrol prices and the same process has now begun for diesel, prices have escalated in the last few years. Owing to this, the state government’s revenue on petroleum products has gone up steeply. The industry bodies are demanding some relief on petroleum products, which will bring a sigh of relief in the present inflationary era.
GCCI has sent a 26-page wish list to the state government. Abolishing input tax credit tops the list followed by seeking relief on electricity duty and VAT on petroleum products. As for GST, GCCI has made a special request.
CII’s biggest expectation from the Gujarat government is to not levy additional or new taxes on people. “Else it will prove counterproductive. Secondly, we want removal or at least reduction in the 2% input tax credit,” said chairman of CII Gujarat council, Piyush Shah.
Electricity duty in Gujarat is one of the highest in the country, he said. “Although we get a consistent supply of power, but power generation here becomes expensive as the duty is high,” Shah added.
According to him, implementation of GST is the need of the hour. However, former president of CII, Yatindra Sharma has cast doubts on GST implementation.
“Looking at present situation, it seems difficult for the state government agreeing on implementation of GST. At the same time, the country is not ready with the infrastructure to support GST,” Sharma explained.
If implemented, GST will add 1.5% growth to state’s GSDP, said Bhagyesh Soneji, chairperson, Assocham Gujarat council. “We have also suggested to the state government to make necessary amendments in rules to give input tax credit on both types of purchase invoices namely, the tax invoice and the retail invoice as input tax credit is admissible only on purchases made against the tax invoice at present,” she said.
At present, it seems difficult for state govt to agree on implementing GST. The country, meanwhile, is not ready with the infrastructure to support GST” -Yatindra Sharma
If implemented, GST will add 1.5% growth to state’s GSDP. We have also suggested the state govt to give input tax credit on tax as well as retail invoices.” -Bhagyesh Soneji