Inflationary Move ?

     Centre had intense pressure from states to amend the section 15 of Central Sales Tax which is hampering states to collect more Value Added Tax(VAT) on schedule B items as states are not allowed to impose more then four percent tax on schedule B items, but finance bill 2011 which is pass by the parliament and now is going to send President of India for sign and once it is sign by the president of India then it will pave the way for union and states government to implement Goods & Service Tax(GST), but will bar on small scale industries to get exemption of excise tax they are getting right now on to the production up to 15 million rupees, so in coming days state and central government will use this opportunity to increase there revenue through sales tax and excise tax but at the behest of general public as it is going to feel the heat of inflationary move of amendment of Central Sales tax section 15, companies will pass on the increasing cost to the end user of there products.
     Finance bill 2011 which is clear by parliament in which Central Sales Tax section 15 is amended from present four percent slab on to schedule B items to 5 percent mean state governments due to ceiling on schedule B items were unable to increase VAT or surcharge will get right to increase it to five percent, some of the main items which are in this list and will effect public are –

• Iron
• Coal
• Cotton and cotton thread
• Jute
• LPG
• Mustard oil
• Pulses’
• Sugar

now finance bill 2011 will send to the President of the country for sign and after the clearance from President then State Governments will allow to increase VAT on schedule B items to five percent, right now Punjab state has already 10 percent surcharge barring on to schedule B items and collection of is reserve for the cities municipal committees of state and some experts have opinion that post finance bill 2011 it can be taken up to 4.4 percent by adding 10 percent additional surcharge, once it is sign by President then it will allow state and central government to implement long awaited Goods and Service Tax, which is in the news for quite a long time now in the country, but it will effect small scale industries of the country which are getting benefits of exemption of exercise tax on to the production up to 15 million rupees per year, but once GST comes into force then they wont get the facilities of exemption and they are also aware of this, that is why excise department is approaching by score of small scale units, along with it excise tax department of the country is also keeping eyes on to small scale units which till date have not make contact with them.
     Once finance bill 2011 sign by the president of India, then prices’ of Schedule B items bound to increase and GST will comes into force both will affect general public of the country and they have to feel the heat of roaring inflation demon.