Gujarat Govt urged to revoke cut on VAT input tax credit

In an attempt to reduce the cost of goods and tough competition from neighbouring states, Gujarat-based traders and manufacturers have requested the state government to take back its amendment of imposing a 2 percent cut on VAT input tax credit.

Gujarat chapters of Confederation of All India Traders (CAIT) has informed to the state government that, the industries involved in textile machine manufacturing, machine tools, synthetic fabrics, chemicals and the like will be adversely affected, owing to cut in the input tax credit.

More so, industry experts aver that, while the industry is struggling with the after effects of economic downturn, the slicing of tax credit will further hamper the growth of the industries in Surat in particular and Gujarat, per say.

CAIT also stated that, drop in input tax credit has turned the state manufactured products more expensive as compared to those sold from other states.

The key problem area is the cut in Central Sales Tax (CST) from 4 to 2 percent, which has adversely affected the state government’s revenue earnings. However, after mutual negotiations between the state and central governments, it was decided that the central government will pay the shortfall.

But as yet the central government has not paid the due to the state government, and therefore, it was decided to reduce the input tax credit in VAT.

Original Source: Fibre2fashion

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