Scrap VAT on MRP in Kerala, says CII

New Delhi, Apr 29 | Updated: Apr 30 2007, 05:30am hrs
Industry body CII has sought withdrawal of the proposed amendment of the Kerala VAT Act, which provides for imposition of value added tax on the maximum retail price, because it feels the act would go against the spirit of VAT.

The Confederation of Indian Industries has written to the empowered committee of state finance ministers seeking its intervention for persuading the Kerala government to withdraw the proposed amendment in the Act, the industry body said in a statement.

The provision provides for payment of a first point tax calculated on MRP printed on the packaged commodities covered by the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.

The chamber said the amendment will cause undue hardship to both industry and trade, apart from being a major deviation from the VAT structure agreed between the states and attempts to levy tax on a notional amount rather than on the actual sale consideration.

Levying of tax on MRP would, therefore, encourage dealers to sell products only at MRP to the detriment of consumers, the chamber said in a statement. The amendment also substantially relaxes documentation requirements for the subsequent dealers in the chain of distribution and may thus encourage non-accounting of transactions, it said.