Decision to slash VAT rates to 4% welcomed

Industry associations in Tamil Nadu drew a mixed response to the TN budget. In his reaction, K B Narasimha Prasad, president, Andhra Chamber of Commerce, said proposal for fine-tuning and simplification of VAT regulations is a step in the right direction. The reduction in VAT rates from 12.5% to 4% on various goods used by the general public will benefit them at large, he added. However, he expressed his disappointment on no specific measures in the budget giving thrust for uninterrupted power supply to the industry.

D Gandhi Kumar, president, Tamilnadu Small and Tiny Industries Association (TANSTIA) said the allocation of Rs 30 crore for the capital subsidy and Rs 10 crore for VAT subsidy under the MSMI (micro small medium industries) 2008 is quite welcome in the budget. Rueing lack of announcement towards infrastructure development in SIDCO run industrial estates, he said apart from allocation of Rs 10 crore for development of road facility to industrial estates there is no special allocation proposed for the development of infrastructure facilities in SIDCO industrial estates.

Making a plea on deferral of payment of VAT arrears for a period of one year to MSMI, he said such measures would strengthen MSMIs to cope with and survive the current economic turmoil and retain the labour force and employment generation. Lauding the litany of sops to agriculture sector, Umesh M Pujara, president, Hindustan Chamber of Commerce said the emphasis on the agriculture sector in the budget has been reflected in the proposal to disburse new crop loans to the tune of Rs 2000 crore.

The government's decision of not to charge interest on co-operative crop loans henceforth to all farmers who repay their crop loans on time from ensuing financial year is laudable, he said.

He further hailed the government for its announcement on taxation front by exempting purchase tax on pepper, cumin seeds, pulses, peas, steel trunk box, tin box, and reduction of VAT tariff from 12.5% to 4% for many items including branded ghee, pickles and stationery items.

A S Kannan, state president of Tamil Nadu Association of Cottage and Micro Enterprises, said Rs 30 crore capital subsidy and Rs 10 crore VAT subsidy announced in the budget will be difficult to avail in the light of MSMI industries in the state reeling under serious issues like power crisis, price escalation and market meltdown.