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Assam Govt hikes VAT to meet salary bill
Published on 3 Nov. 2009 11:56 PM IST
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The Assam Government’s decision to hike VAT to meet the salary bills after the pay hike recommendation, has drawn flak from both the opposition and the industry. According to official sources Assam needs around Rs 4400 crore for the new salary bill expected to be given from January, when the Pay Panel recommendation is to be implemented. According to a UNI report, the government’s decision to increase VAT by 1 percentage point on items subjected to 4 per cent and 12.5 per cent tax under Schedule II of the VAT Act has come under attack both from the opposition and industry bodies. VAT on items like bicycles, aluminum utensils, bamboo products, medicines, sewing machines and several others has increased from 4 per cent to 5 per cent. However, VAT on declared goods would remain at 4 per cent. Sources in the state government said around Rs 130 crore additional revenue will be generated by the hike. Meanwhile, Chief Minister Tarun Gogoi today reiterated his governments commitment to pay the revised pay scale to its employees but sought to buy some time till the finances are tied up. He said the Bhaskar Barua Pay Panel Report has to be first cleared by the state cabinet. “There is no need to worry,’’ he said, when asked about the growing restlessness amongst the government employees over the issue. The Chief Minister, had already met Union Finance Minister Pranab Mukherjee and discussed with him the financial implications of the state governments move to hike the salaries, bringing it at par with the Central Government employees. He said, ‘’We have already paid over Rs 3000 crore of the Rs 4400 crore. Where is the reason for apprehension? ‘’We have to arrange for some extra funds,’’ he said, reminding that he has already approved the basic principle. The main opposition party, Asom Gana Parishad (AGP), lambasted the government for this move to raise tax. “Already, the ordinary people were being harassed,’’ they said. The Federation of Industry and Commerce of the North Eastern Region (FINER) also feels this move would be counter productive. The FINER, in a statement, said it was shocked and strongly resented the arbitrary increase in VAT rates in the latest notification issued on October 31 by the Assam government. “In these times of global economic slowdown, which has affected every segment of the economy and with national governments across the world focused measures to fight this slump, this step by the state government is totally uncalled for, unwarranted and against the prudential norms of economics, the FINER added.

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