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The state government showed keen interest on hearing the grievances of the trading community. Considering various representations, the VAT levy has been removed from following goods with effect from January 1, 2007.
Agriculture
Fertiliser mixture manufactured out of chemical fertiliser for which tax has been paid locally
All seeds used for sowing purpose
Local sale and inter-state sale of coconut other than copra
Small Traders
Local sale and inter-state sale of coconut other than copra
Peas flour
Fried peas
Coconut shell powder
Packed drinking water sold in sealed refill cans and sachets
Panchamirtham, namakatti, vibuthi and prasadam sold by any dealer
38 specified traditional medicines
Seashell, seaweed, agar and alginate
Synthetic gems
Thanjavur plates
Cloth bag
Camphor in all forms
Cashew shell
The turnover limit for exemption for edible oils including refined oil, oil cake and deoiled cake was fixed as Rs 300 crore in 2000. This turnover limit will be increased as Rs 500 crore
Tax exemption granted to pulses and grams in the last budget will be extended to mochai, karamani, thatta payaru, kollu and avarai.
The turnover limit of Rs 300 crore for the exemption for pulses and grams fixed during 2000 will be increased to Rs 500 crore per item
The rate of tax on wheat will be reduced from 4 per cent to 2 per cent
Rate of tax on bottled mineral water purchased after paying tax and sold by non-star hotels and sweet stalls will be reduced from 12.5 per cent to 2 per cent.
Middle class family
Kerosene pressure stove
Tax exemption granted to all edible oils in the last budget will be extended to all refined oils.
Pillow covers, bedsheets and towels made from handloom and powerloom cloth other than those made of mill-made cloth
Education
Instruments for drawing and dissection
Graph and exercise notebooks
Mathematical learning instruments
Wood covered lead pencils, writing pencils, erasers, ebonite pens, ebonite ball pens, writing ink including ink tablets
The above exemptions will be very useful for the trading community, middle class families and students.
Similarly, the rate of tax on the following commodities which are used by the common people and now liable to tax at 12.5 per cent will be reduced to 4 per cent. They are:
Grocery
Chicory and unbranded coffee powder other than instant coffee
Masala powder with brand name
Tapioca chips, flour, tapioca waste
Bajji flour
Energy (sathu mavu) flour
Unbranded ghee
Date syrup
Vegetable oil (vanaspati)
Bakery
Unbranded bakery products including bun, rusk, biscuits and cakes
Medical
Diagnostic kits, diagnostic reagents, accessories, blood bags and disposables
Utensils
Wet grinders
Mop made of cotton yarn
Construction
RCC pipes (without input tax credit on purchase of cement)
Jolleys, door and window frames made of RCC (without input tax credit on purchase of cement)
Unbranded steel furniture
All plastic goods other than doors, windows, frames, profiles, automobile, industrial and sanitary items
Barbed wire, wire rod and wire links
Pooja items
Kuthuvilakku, agalvilakku, pavai vilakku, yanai vilakku, karthikai vilakku, kovilmani, karpoora thattu, dhoobakal
Moulded idols
Musical
Audio cassettes including pre-recorded cassettes
Education
Accounts books and diaries
School bags and unbranded travel bags
Shields
Used cars / Industry
Used cars/ motor vehicles on value addition without input tax credit
Textile machinery and parts
Fasteners including nails, bushes, washers and rivets
Electroflux
The reduction of 8.5 per cent will certainly make a big difference in the end price. The dealers must come forward to reduce the price to make their product competitive.
The Government has also decided to levy tax at 4 per cent on certain goods which are consumed or used by industries in manufacturing:
Superior kerosene oil (without input tax credit)
Molasses purchased and used in manufacture of chemicals by chemical industries which were earlier permitted to procure molasses at 20 per cent tax. They are not eligible for input tax credit.
Certain goods like industrial gases, textile machinery, etc., are ultimately used or consumed as industrial inputs. It has been decided to list such goods to be taxable at 4 per cent when sold either by the manufacturer or by trader as industrial input.
Entry 67 of Part B in First Schedule to the TN VAT Act, 2006 provides for notifying industrial inputs. Already 27 items have been notified under the entry. Instead of issuing notifications periodically and indefinitely, it has been decided to amend the relevant entry to make the definition of industrial input read as follows:
Any goods falling under Part C of the First Schedule to the TN VAT Act including consumables, packing materials and labels but excluding plant and machinery, ethyl alcohol, absolute alcohol, methyl alcohol, rectified spirit, neutral spirit and cement for use in manufacture and assembling, packing or labelling in connection with such manufacture inside the state for manufacture of goods other than those falling under Second Schedule.
In fact, most of the queries raised on the industrial inputs classification. Now this has given big opening for the segment. So, all consumables, packing materials and labels used in manufacture, assembling, packing or labelling in connection with manufacture will get the benefit.
Traders who have a turnover up to Rs 50 lakh and opted to pay tax under compounding system at half per cent are now liable to pay tax even on the turnover relating to sale of those goods which are exempt from tax. With a view to ensuring that they need to pay tax only on the turnover relating to sale of taxable goods, necessary amendment will be made to the VAT Act.
With this, the second and subsequent selling dealers will get the benefit.
Accepting representations made by traders, it has been decided to list the commodities taxable at 12.5 per cent as Part C of First Schedule to the VAT Act. All the tax proposals announced herein shall be deemed to come into effect from January 1, 2007.
The list of commodities under 12.5 per cent needs to be furnished. This will clear the unnecessary confusion for dealers to search their product in various other schedules.
In general the Tamilnadu State Budget shows encouraging sign for small traders and middle class families. We can appreciate the state government for bringing these benefits.
(Log on to www.aceprocedures.com
for more information on Union & State budget
2007)
Vinod Kuriakose
(The writer can be contacted at
feedback2vinod@yahoo.co.uk)
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