The West Bengal budget’s proposal to increase the value added tax (VAT) rate by one per cent would be detrimental to the interests of trade and would have an inflationary effect, industry and commerce bodies said.
Reacting to the budget proposals, Kallol Datta, President, Bengal Chamber of Commerce and Industry, said, “The increase in VAT rates is likely to have a cascading inflationary effect on all commodities, barring gold and silver.
Datta said even as the budget had some benefits for micro, small and medium enterprises, there was no specific guideline to boost the growth of large industries.
The Confederation of Indian Industry (Eastern Region), however, expected that the extra revenue generated by increasing the VAT rate would be used for financing infrastructure and social development.
Bharat Chamber of Commerce, however, felt that higher VAT would be unfavourable for trade in the State.
“The increase in VAT rate by 1 per cent, along with entry tax, would have a detrimental effect on the cost of production since most industrial inputs are procured from other States,” Ashok Aikat, President of the Chamber, said.
Amit Sen, President, Bengal National Chamber of Commerce and Industry, said the VAT increase from 4 per cent to 5 per cent would raise the prices of almost all commodities.
The Indian Chamber of Commerce said additional resources (by raising VAT) would empower the State economy and would benefit businesses.