The manufacturing sector in Tamil Nadu has got a ₹650-crore boost with the State Government announcing critical commercial tax concessions.
Presenting the budget for 2015-16, the Chief Minister O Panneerselvam said in the Assembly that despite the slow growth in State’s tax revenues and increased financial burden due to subsidies and allocation to social sectors the government is committed to supporting manufacturing. It has also not imposed any new taxes.
The government will withdraw electricity tax on power generating plants using biomass to support clean energy. But this concession is not provided for units using bagasse.
To make the industries in the state competitive with those in neighbouring states, the 3 per cent Input Tax Credit reversal will be withdrawn. This was imposed on November 11, 2013 under section 19(2) (V) of Tamil Nadu Value Added Tax Act 2006.
Dealers will also be able to claim input tax credit on inter state sale of goods without C Form with the Clause C under Section 19(5) of TN VAT Act withdrawn. This will do away with the hassles associated with inter-State sale of goods without `C` forms.
Tamil Nadu Finance Secretary K Shanmugam said that doing away the complications in interstate sales is aimed at addressing the needs of the growing e-commerce businesses. Since these businesses have warehouses in one location and sell directly to consumers without a C Form, the additional expense has been cut.
VAT rate cutVAT on LED lamps, cell phones, air compressors, pump sets up to 10HP and their parts has been reduced to 5 per cent from the present 14.5 per cent.
The government has also exempted a range of fishing accessories such as ropes, floats, twine, lamps and swivels from VAT.