Traders say VAT to hit trade, consumers

A month after the government issued a white paper on the value-added tax, traders on Thursday released their own white paper and said the proposed provisions would adversely affect trade, industry and the common man.

Releasing the paper, Praveen Khandelwal, secretary general of the Confederation of All-India Traders, an apex trade chamber in the Capital, said a detailed study of the government's white paper revealed that the present form of VAT would certainly lead to inflation.

"The common man will be hit badly as thousands of items are kept under the highest tax slab of 12.5 per cent. Essential items like foodgrains and salt have also been put in the VAT net," he said.

Traders further alleged that the new regime would have a cascading effect on prices as the rules for giving input tax credit were very stringent.

"Tax paid on inter-state purchases is not entitled for set off. Certain capital goods will also not be entitled for VAT credit. All these are against essence of VAT," CAIT said in the white paper.