Punjab soap industry seeks excise duty waiver, 4 pc VAT

Punjab Soap Manufacturers Association has sought waiver of excise duty on soaps and demanded that the state government brings Value Added Tax at par with other states. In separate memorandums submitted, the soap industry has urged the Finance Minister P Chidambaram to abolish 14.42 per cent excise duty on washing soaps, while requesting Punjab Chief Minister Parkash Singh Badal to reduce VAT on soaps from 12.5 per cent to four per cent.
The combined effect of excise duty and high rate of VAT on laundry soaps has forced the industry to shut down 40 units in the last three to four years due to declining sales.

Besides, it has also reduced the total industry size from Rs 1,200 crore to 600 crore now, according to Punjab Soap Manufacturers Association President Surinder Arora. With hilly states such as Jammu and Kashmir, Himachal Pradesh and Uttaranchal enjoying tax break by the centre, the industry has not been able to compete with the products coming out of these states as its production cost is 32 per cent more than their cost due to tax, he said. "Washing Soap being the basic necessity for every one should not be overly burdened with the high tax rate," he said.

Source : Economic Times - Gurgaon, Haryana, India, dated 09/09/2008