The Bangalore Chamber of Industry and Commerce (BCIC) today described as ‘unwarranted’ the 0.5 per cent increase in the value added tax (VAT) by the State Government, saying it would affect the industry and the consumers.
“With fresh 0.5 per cent increase in the VAT, the industry will further suffer growth prospects and will affect people at large as they are already facing challenges in sustaining monthly budgets,” the BCIC said.
The Chief Minister, Mr Jagadish Shettar, yesterday announced in the Assembly the increase in VAT rates in 5 per cent and 14 per cent slabs to 5.5 per cent and 14.5 per cent respectively to raise additional resources of Rs 1,000 crore.
Mr P.V Srinivasan, Chairman, Indirect-State Taxes Expert Committee, BCIC said, “It is surprising that the Government has increased the VAT rates mid-way through the year and that too giving a very short notice as the revised rates are with effect from August 1, 2012 itself.
“This will dampen the demand for several consumer goods including electronic items at a time of the year when the trade looks for seasonal pickup in sales, adding to the woes of already sluggish demand,” he said.
BCIC mentioned that it apprehends the higher revenue mobilisation on account of the rate increase will be offset by lower tax collection on account of lower sales.