Ajit Pawar’s tax correction move brings cheer to SMEs

The decision of Finance Minister Ajit Pawar, for whom it was a tough Budget balancing drought mitigation efforts with development goals, to slash tax on capital goods from 12.5% to 5% has been welcomed by industries, particularly Small and Medium Enterprises (SMEs) here.

Industry watchers and industrialists said the move would set right taxation anomalies vis a vis other states, which had a debilitating effect on industries in Maharashtra.

Deepak Karandeekar, honorary secretary of the Mahratta Chambers of Commerce Industries and Agriculture (MCCIA), welcoming the move, said it would propel growth of capital goods industries, which have a very strong presence in Mumbai-Pune region.

"The sales tax charged on this industry in Maharashtra was 12.5%, while neighbouring states like Gujarat, Goa, and Karnataka charged around 2-4%. Through the MCCIA, we have been demanding that the government correct this anomaly to help growth of industries. We are glad the state government adhered to our request," he said.

The capital goods industries are mostly small and medium industries and have a very strong presence in Mumbai, Pune, Thane and several other parts of the state. These industries, Karandeekar stated, functioned mostly as suppliers to the automobile sector that has grown in Pune-Mumbai region.

"Owing to the steep tax rate, industries were at a disadvantage while bidding for government contracts as rates would be higher than those quoted by other companies from other states," he said.

Similar sentiment was echoed by Vikram Salunkhe, vice-president of MCCIA, who said the MCCIA had been in correspondence with the government on this. "This move would allow industries to grow in the right manner," he said.

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