Sunday 29 November 2020

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Economy | Industry

Industry opposes entry tax

 

Countering stiff opposition from the Goan industry, the state government has gone ahead with the imposition of entry tax for all kind of raw materials imported in the state, from 1 September, except for those sales tax is paid.

Ahead among it is the Goa Chamber of Commerce and Industry, who has strongly opposed imposition of such a tax, which is on the lines of octroi but would not be collected at the border check posts.

The basic purpose of the entry tax is to plug the loophole as the industries here bring raw materials and take away finished products to the sales outlets outside the state at the cost of state's infrastructure and incentives, but without paying anything towards the duties.

According to chief minister Francisco Sardinha, it is primarily regulatory and compensatory in nature, levied because the state was not earning any revenue in spite of providing all the necessary infrastructure facilities. To begin with, the tiny tourist state expects around Rs 30 crore annually.

In order to encourage local trade of these items, the state has also fixed rates of the entry tax at low, in the range of half per cent to six per cent on 38 specified items, except 10 per cent on petroleum products. In addition, the state has notified that raw materials, packaging materials as well as the plant and machinery would be charged only three per cent of sales tax, if purchased in Goa.

"This would obviously help the state as several companies could open its trade outlets in Goa instead of the manufacturers purchasing these products from outside the state", claims Y S Pai Bir, assistant sales tax commissioner. The logic is that industries would prefer buying it locally rather than importing it by paying sales tax in those states and entry tax in Goa.

Though Sardinha altered his decision announced in the budget speech later to exempt the small scale industry except products like chemical units, pharmaceuticals, ferro alloy and steel melting units, the small industrial sector has also welcomed the decision with reservations.

"With VAT becoming applicable from 2002, the era of globalisation should lead towards less and less taxation. But our government is going the reverse way", comments, Sudin Naik, president of the Goa Small Industries Association. "We are against any kind of additional tax", he adds.

Though Sardinha describes it as plugging the major loophole while filling empty coffers of the state, Naik feels the criteria of rest of the India cannot be applied here since Goa is always considered a processing zone as 98 per cent of raw material has to be imported. "On the contrary, the state should control its wasteful expenditure", he adds.

While the GSIA expresses fear that the decision of entry tax would discourage the medium size industry coming down to the tourist state, GCCI president Dattaraj Salgaoncar has demanded that the concept itself be scrapped.

Alleging that the GCCI was not taken into confidence before taking such a major decision, Salgaoncar has said it would adversely affect the existing industry while making it difficult for new industries to come in, in spite of Goa offering five-year income tax holiday and 10-year sales tax holiday.

The pharmaceutical industry, on the other hand, has approached the government with a plea to reconsider its decision to include their sector even in the small scale sector, stating that they will have to close their units if the entry tax is extended to them. The government is still not responded to it.


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