Gujarat governments decision to impose VAT has led the industrial circle in Surat to an intense lobbying, with the industrialists planning to meet State Finance Minister this week to request him to rethink on the issue. The diamond association declared that the entire diamond industry will be shut down if the Government does not rethink on imposing value added tax (VAT) in the State on March 2, 2006.
Diamond and zari are two major industries in Surat that will have to pay VAT as per the new tax regime established in the State. While zari manufacturers have to pay 4%, the diamond industry has to pay 1% tax under the VAT system. Earlier, the diamond industry was not covered by any taxation other than income tax, as the industry was supposed to handle only raw diamonds which are mainly exported.
98% of the diamonds from our industry are being exported and the Government is getting a huge revenue as foreign exchange and income tax. We feel that bringing diamond industry under VAT will only affect a flourishing industry, said Chandrakanth Singhvi, convener of Gems Export Promotion Council. In support of the industry the former Textile Minister Kashiram Rana has also issued a statement urging State government to rethink on the VAT regime. Southern Gujarat Chamber of Commerce vice president Pravin Nanavati announced that, they will meet the State government officials to seek their reconsideration on the issue.