One of India's leading industry bodies - the Associated Chambers of Commerce and Industry - on Friday urged the government to bring sugar, textiles and tobacco products under value added tax.
In a proposal to the Empowered Committee of all state finance ministers, Assocham president Venugopal N Dhoot said that under the current VAT rules, goods used for personal consumption are exempt from VAT levy and therefore make domestic market vulnerable for overseas goods.
The industry body pointed out that at present state VAT does not cover certain sectors like textiles, sugar and tobacco. These products are charged separate duty in place of VAT, which is not vat-able.
"If these indigenous products are used as inputs, then goods produced with such local inputs like garments and food products will suffer competitive disadvantage in the international market," Dhoot said.
He said the non-vatable special duties should be merged in state VAT.
The chamber noted that goods imported through various dealers are only subjected to VAT while mass imports for personal consumption escape it.
Dhoot also emphasized the need for introducing uniform state VAT so that uniformity in the tax structure is retained for ensuring creation of common market.
