Entry tax from September

| 26 August 2000 17:44 IST

Almost five months after the proposal was mooted while presenting the annual budget in March, Goa has now decided to impose 'entry tax' on all the imported raw materials, for which no sales tax is paid locally.

All the products brought here in bulk for personal consumption or manufacturing purpose by the medium and large scale industries as well as the ones for Ferro alloys, steel melting, pharmaceutical and chemical units in the small scale sector would be imposed the entry tax.

The small scale industries at large as well as the traders who pay sales tax are totally exempted from this unique kind of tax, which coincides with the nature of an octroi duty. "We do not want our state to become only a processing zone,", says chief minister Francisco Sardinha.

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 our infrastructure and incentives, but without paying anything towards the duties.

"It is primarily regulatory and compensatory in nature", describes Y S Pai Bir, assistant sales tax commissioner. With the department choosing 38 select items for the purpose, the tourist state is expected to earn around Rs 30 crore from it 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, 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", explains Bir. 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 several electronic units had met the chief minister to put a halt on the entry tax proposal, Sardinha has clarified that no electronic unit would be exempted from imposition of the entry tax. "I may go for more items to be exempted, but strictly on case-to-case basis", he states.

The entry tax is levied because the state was not earning any revenue in spite of providing all the necessary infrastructure facilities. Moreover, such a system leaves the local traders at a disadvantage, since the goods purchased from across the state turn out to be cheaper as the latter escape the local sales tax net, adds Sardinha.

Meanwhile, Sardinha at a cabinet meeting yesterday has also decided to exempt additional tax on imported bullion in order to avoid smuggling of gold. The state has also once again rationalised excise duty rates on IMFL and beer, making it little more costly since the liquor industry had not passed benefits of the reduced duty to the consumer.

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