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These
include tea, cellphones, TV, computers, laptop, air
conditioners, refrigerators, electrical and electronic
goods, steel, iron and steel. The difference in tax rates
between Uttar Pradesh and the neighboring states on most
of these items is as high as 8.5 per cent.
Now,
the business and industry are up in arms against the
government’s move and the traders’ organisations have
called for a statewide bandh on October 4.
Terming
the government’s decision “retrograde”, the traders
said the high tax rates will inflict damage on the
state’s economy as business will be diverted to other
states.
“The
hike will not only cause a huge loss to business, but will
also accelerate the process of migration of industries to
neighboring states that provide a better tax structure,”
said Praveen Sadana, president of the Indian Industries
Association (IIA). Rohit Kohli, president of the UP
Computer Dealers Association, agreed: “Instead of buying
a laptop or a computer at 12.5 per cent tax, the buyer
will prefer getting it from neighboring states where the
tax is 4 per cent.”
Those
involved in manufacturing transformers are also making
dire predictions. “The tax on the cheapest transformer
will be Rs 17,000, which will make our products
uncompetitive. If the hike is not rolled back, then we
will have to shift our units to Uttarakhand,” said S K
Rungta, president of the UP Transformer Industries Forum.
The
Indian Cellular Association (ICA) — an apex body of the
mobile industry comprising manufacturers, brand owners,
distributors, retailers and consumers — has, meanwhile,
urged the state government to reconsider its decision of
increasing the VAT on mobile phone sets from 4 per cent to
12.5 per cent.
In
a memorandum to the government, the ICA said the hike
would only lead to smuggling of cellphone sets from the
adjoining states and even Nepal where the tax rate is 4 to
6 per cent.
Pankaj
Mohindroo, ICA national president, said it may also lead
to the emergence of a grey market, where the consumer will
purchase the sets without giving any tax to the
government. “With the hike in the taxes, mobiles sets
ranging in price between Rs 1,500 and Rs 30,000 will be
costlier by Rs 127 to Rs 2,550,” he said. The government
has, however, defended the hike saying that the traders
did not pass on the benefit of its original decision to
cut VAT to 4 per cent to consumers.
“The
VAT has been increased only on those goods and products
which were charged at the rate of 7 to 11 per cent under
the old trade tax regime,” said Govindan Nair, principal
secretary of tax and registration.
Source
: Lucknow Newsline - Lucknow, India, dated
24/09/2008
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