| The Confederation of Indian Industry (CII) has called for early introduction of the value-added tax (VAT) in Rajasthan and drafting of a new industrial policy to attract investment.
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| In a pre-Budget memorandum, the chamber has also stressed the need for steps to control the revenue deficit and to improve the state’s fiscal health.
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| According to the chamber the VAT should be introduced as early as possible to plug tax leaks and boost the state’s revenues.
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| For instance, Haryana, the only state that shifted to the VAT regime, had reported an impressive 20 per cent increase in VAT collections during the last fiscal, the chamber said.
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| Prior to the changeover to the VAT, the state had been reporting an average annual increase of around 12 per cent, it added.
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| In the first two months of the current fiscal, Haryana has reported a whopping 38.39 per cent jump in the VAT collection.
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| The chamber says post-VAT, all tax-based and other fiscal incentives (deferrals and exemptions ) need to be phased out. There is a need to rationalise user charges as well for improving the revenue collections.
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| Commenting on the fiscal situation of Rajasthan, the memorandum says increasing the debt burden is a concern. Growth rate of debt at 15.3 per cent from 2000 to 2003 exceeds the 11.30 per cent growth rate of revenue receipts during the same period.
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| If the current trends continue, debt-servicing costs would claim an even greater share of revenue receipts, leaving that much less for the development expenditures. There is a need to re-prioritise expenditure so that greater money is allocated towards creation of capital assets that enhance social and economic infrastructure.
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| To increase competitiveness of industry, the paper says the entry tax on fuels and lubricants should be withdrawn.
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| Sales tax on marble slabs and tiles should be reduced from 12 per cent to 8 per cent. The luxury tax on cigarettes should be reduced and entry tax eliminated.
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| Issuance of sales tax forms 18A, 18C, and other declaration forms, should not be correlated with pendency of sales tax demands. Sales tax deposit should be required on a monthly basis. The state should also bring down the stamp duty rate to 4 per cent, besides reducing the number of specific duty rates.
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| To facilitate a conducive environment for industrial growth, it recommends the elimination of inspector raj.
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| To that effect, a common and transparent inspection should be carried under all pollution and labour laws, once a year as per an advanced schedule and with prior intimation.
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| There should also be self-certification in factory and labour laws for all industries, except major hazardous industries.
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| The single-window system should not only ensure initial approvals to set up the project, but also look into the requirements of obtaining further licences necessary to commence production.
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| The system should also provide the facility to the investor in obtaining all the necessary state-related approvals from the concerned departments. |
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