India: MP State Government likely to reduce Entry Tax on TMT

Owing to trader’s objection and loss in Steel business, state government has planned to reduce the entry tax on TMT.

Currently, the entry tax is 5% on TMT, which is planning to reduce 2%. In FY12, the MP state government had raised the entry tax from 2% to 5%. Although for domestic TMT, the entry tax had been kept to 2%. Neighbor states like Chhattisgarh & Maharashtra had supplied TMT to MP in large quantity on low rates but it led to local losses. This pressured, the State Government to raise the Entry Tax. But, looking at the increasing theft, the government has eventually raised it again.

Why does government want to reduce Entry Tax?

According to official’s sources of commercial tax department, government believes that there is tax evasion owing to high entry tax on TMT. Along with this, business is also in loss. As high quality of TMT is very costly, so entry tax should be reduced.

Earlier, states like Chhattisgarh & Maharashtra had supplied TMT in large quantity, which is also continued after the increment in entry tax, but illegally. The TMT which is manufactured in state is charged by 2% entry tax. Apart from this, domestic and other states supplied TMT is charged with 5% VAT. There is difference of 3% tax on the other state supplied TMT. Owing to this, the TMT prices of big companies like TATA & SAIL has increased.

In many of the government projects, it is necessary condition to use high quality of TMT. Owing to this the construction cost increases. By assuming the entire situation, the MP state government has decided to reduce the entry tax on TMT.

As on Date – 02.01.2014
NA – Not Applicable