India: Chhattisgarh Finish Steel Manufacturers in Dilemma over New Tax Regime

Chhattisgarh’s steel manufacturers will be charged by different Value Added Tax (VAT) in sales as per capital expenditure in plant. For capital investment of more than INR 10 crore will be charged by 5%, whereas capital expenditure of less than INR 10 crore will be charged by 3%.

As per the CG Budget announcement w.e.f. 1Apr 2014, the new VAT charges will be implemented as per the industry categorization. The small scale (capital less than 1 crore) and medium scale (capital less than 10 crore) steel industry will be charged by 3% VAT. However, large scale (capital more than 10 crore but less than 100 crore) industry will be charged by 5% VAT. Similarly, CST 2% will be applicable to large scale manufacturers, whereas small & medium scale steel industrialist will be charged by 1%. Around 6 major TMT brands will fall under 5% VAT, whereas rest will be charged by 3% VAT.

“Its sad news for the steel industry as the same product (Re-bar) will be charged for two separate taxes (as per the industry classification) by two separate plants. The industry as a whole doesn’t support this law,” said a Re-bar manufacturer (medium scale), benefited by 2% rebate in VAT.

Note: Only Reference Price