New taxation policy announced by Chhattisgarh Government is more beneficial for small & medium scale steel industry than the large scale industry.
Pursuant to CG Budget announcement effective from 1 Apr, 2014 the different Value Added Tax (VAT) is applicable to steel manufacturers of Chhattisgarh as per the industry capital categorization. In this announcement, 3% VAT is applicable to steel industry which fall under the small scale, having capital expenditure of less than INR 1 crore and medium scale; capital less than INR 10 crore. Contrastingly, 5% VAT is applicable to large scale industry, having capital investment more than INR 10 crore but less than INR 100 crore.
Moreover at present state of affairs, 2% CST is applicable to large scale, whereas 1% to small & medium scale industry.
Scenario before budget announcement
Before the announcement of CG Budget, the condition was not much beneficial for small & medium scale manufacturers. Earlier, there was no such categorization and 3% VAT was applicable to only two products namely TMT & Structure, whereas rest other were charged by 5% for all Chhattisgarh based steel industry. In line, CST 2% was also applicable for all the industry.
Chhattisgarh, the largest steel producing state by secondary manufacturers, consist of more than 190 rolling mills and most of them fall in small to medium category.