Punjab VAT : VAT on iron, steel items slashed

NEW REGIME RESTRUCTURED FOR IRON & STEEL INDUSTRY UNDER THE PUNJAB VAT ACT 2005 LIKELY TO BE INTRODUCED FROM 01 FEB 2014

Punjab Government has announced to slash VAT rate on Scrap (Melting & Rolling), ingots, billets, blooms or other semi finished goods, finished goods, interstate sales to 2.5% from 4.95% with surcharge of 10% with effect from Feb 01, 2014 as Mr. Badal has announced that Punjab Cabinet will approve new VAT Rate for Iron & Steel industry in 1st week of January & the same will be implemented by issuing a notification with effect from 1st February 2014.

In this new restructured VAT regime the State Government has also decided to calculate VAT on the basis of electricity consumption per unit which is as under:

After the implementation of new system, there should be a minimum commitment of production of 1 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.

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.

S.NO.	Minimum commitment of production	UNITS CONSUMED OF ELECTRICITY
1.	One Ton of Finished item	250 units
2.	For Furnace One Ton of Ingot	750 units