Tamil Nadu Budget 2015-16 Changes in VAT
Introduction:
In
order to boost the manufacturing sector bogged down by negative
sentiments, the State Government has come forward with some relief in
electricity tax, and reversal on Input Tax credit when stocks are moved
out of State in pursuance of stock transfer, interstate sales etc., in
the budget
presented on 25.03.2015 in the TN State Assembly. There are
already cases pending before the Appellate levels/Higher Forums as to
whether the reversal of Input tax credit is applicable for manufacturing
sectors for interstate sales with ‘C’ Forms but in the current budget,
the said proviso is withdrawn. A big relief to the industries as a
whole. Also no new tax is proposed in the budget. The salient features
of the TN State Budget are:
a)
Electricity Tax on generating plants using Biomass (excluding bagassee)
will be withdrawn to give a boost to green energy producers.
b)
Input Tax Credit reversal imposed at the rate of 3 per cent on the
inter-state sale of goods as per proviso to section 19(2) (v) of Tamil
Nadu Value Added Tax Act 2006, which was introduced with effect from
11.11.2013 will be withdrawn henceforth to make the manufacturing
industries in Tamil Nadu more competitive with their counterparts in the
neighboring States.
c)
Clause (c) under Section 19(5) of TNVAT Act, 2006 will henceforth be
withdrawn to enable the dealers to claim Input Tax Credit on the
inter-State sale of goods without ‘C’ form. This measure will eliminate
additional burden on the dealers effecting inter-State sale of goods
without ‘C’ form.
d) Fishing accessories like fishing
ropes, fishing floats, fishnet twine, fishing lamps and fishing swivels
will be exempted from the present levy of VAT.
e) Mosquito nets of all kinds will be exempted from the present levy of VAT at 5%.
f) Works contract relating to sizing of yarn will be exempted from the present levy of VAT.
g) VAT on cardamom will be reduced from the present levy of 5% to 2%.
h)
VAT on LED lamps of all kinds will be reduced from the present levy of
14.5% to 5% to encourage the use of energy saving devices.
i)
VAT on air compressors, pump sets up to 10 hp and their parts thereof
will be reduced from the present levy of 14.5% to 5% to encourage MSME
Sector and to benefit the agriculturists in the State.
j) VAT on cellular telephones (mobile phones) will be reduced from the present levy of 14.5% to 5%.
Conclusion:
When the recent Central Budget is presented welcoming GSTin the mind in
the year 2016, the State Budget is silent about the implementation of
the GST in the state. The withdrawal of the ITC reversal will make the
manufacturing industries in Tamil Nadu, more competitive certainly.