According to SRO 128 dated March 30, 2001, Small Scale Industrial units were exempted from payment of tax under J&K GST Tax act, 1962 till such time the exemption from the Sales Tax on finished goods manufactured by individual unit was available or up to March 31, 2003, whichever was earlier. This was extended till September 30, 2003 as the package of incentives was extended for another six months. Finance minister announced in his budget speech a provision of this exemption and as a follow up, the government constituted a committee vide government order no 546 GAD of 2008 dated April 22, 2008 to work out the modalities. The committee submitted its recommendations in January 2009. However, the SRO was not issued due to declaration of General Election. We recommend the SRO be issued with retrospective effect from April 1, 2008. Units that have deposited the tax must get a refund.
J&K has a higher slab for work contract tax. Against 2 percent levied by Himachal and 4 percent by Punjab, J&K charges 8.4 percent. Lakhanpur toll post should be opened round the clock.
Food industry is a “thrust area” but edible oil extraction units are in the negative list and denied VAT remission. It needs a change. We suggest the industry related activity be covered under VAT regime and not service Tax regime. VAT on food and beverages in J & K is 12.5 percent and in Himachal it is 4 percent. Sales Tax on IT consumables (Cartridges, Tonner etc.) should go to 4 percent at par with Punjab, HP, Delhi & UT of Chandigarh from existing 12.5 percent.
The quarterly certification from DIC for submission to Excise Department for toll tax exemption should be replaced by an annual certification.
Reduce the Stamp Duty, currently at 21.6 percent, which is perhaps highest in the country. All other states’ have slabs between 7-10 percent.
The limit for auditing accounts up to Rs 40,00,000 should be enhanced to Rs 1,00,00,000. The audit of accounts could be done only on taxable turnover.
The period for Input Tax Credit on the goods returned should be increased to one year instead of 90 days because in certain cases (like medicines) some goods are accepted back by the companies. The definition of turnover should be modified, only sale to be considered.
Copper recycling units provided employment to 10,000 people but non-availability of raw material has hit it hard. CII represented Union Finance Ministry seeking level playing field by removal of 4 percent SAD and 5 percent import duty on copper scrap. Steps need to be taken to enable this sector to compete with tax free imports from countries having preferential trade agreements with India. State government must pursue central government over the excise package that was withdrawn midway. For SSI units, 3 percent interest subsidy was announced but an SRO is awaited.
Unlike Himachal Pradesh, Chandigarh and Punjab, where CSD stores are exempted from any VAT, J&K imposes 12.5 percent. It must be done away with.
Lack of wheeling and open access in hydel policy is discouraging private players. PDD is yet to undergo unbundling into transmission and distribution (T&D) entities. In industrial tariff, demand charges may be rationalized as per daily hours of power supply. An Ombudsman should be appointed to settle disputes. More funds may be allotted for strengthening the T&D infrastructure to reduce the existing losses from 47 percent to 22 percent.
