In a relief to secondary steel makers, Punjab Government on Tuesday announced to slash VAT rate from 4.95 per cent to 2.5 per cent on iron and steel items.
Punjab Deputy Chief Minister Sukhbir Singh Badal gave nod in this regard after holding a meeting with the delegation of furnace, iron and steel rolling mills here.
The new proposed VAT regime on iron and steel industry is aimed to enable it to compete with neighbouring States and increase in revenue.
As per decisions taken, the rate of VAT on scrap (melting and rolling), ingots /billets/blooms or other semi finished goods, finished goods, inter-state sales would be reduced to 2.5 per cent from 4.95 per cent with surcharge of 10 per cent.
“After the implementation of new system, there should be a minimum commitment of production of a tonne of finished items with 250 units of consumption of electricity, whereas for furnace units, a minimum commitment of 1 tonne of ingot production with 750 units of electricity has been made,” official said.
“This new system (of calculating VAT) will eliminate tax evasion and also lead to increase in production by encouraging flow of scrap and raw material into the State,” a statement said.