The Budget Fury [May 2012]

The budget leaves one with several unanswered queries and expectations, the fenestration industry too is waiting for its turn, the taxation policies to name a few. Satish Kumar, Director at Elumatec India opines    
Come February and every industry anticipates some relief in taxation due to the budget. Pending decisions, postponed meetings have a significant impact on ongoing project schedules. The only excuse being budget.    Several industries use the tax increase after budget very effectively in March and sometimes till end of April. One will come across newspapers filled with advertisements of flats available at pre-budget rates, cars at previous year’s prices, consumer durables at clearance sale.
Can the same be said about the fenestration industry? At least there is a demand for it though no one is able to offer it. Builders are interested in closing maximum sales during this period to get the cash-flow up and vendors try their best to close their financial year by collecting maximum payments. Therefore the period from February to March end is considered a dreadful time for many. Buying a machine would the last thing on one’s mind.
Taxation in India comes across as a complicated process with different kinds of taxes such as sales tax, value added tax, excise duty, service tax and to top it, octroi in some cities. Does window come under fabrication and supply or fabrication, supply and installation, the query remains. The supply bill with CST/VAT and installation bill separate with service tax confuses things further. If the turnover is more than Rs.1.5 cr then an excise duty is levied. Every year one expects some clarity on the process but in vain.
The euro and USD are at an all time high and the government has gone ahead and increased the excise duty and CVD from 10.3 per cent to 12.36 per cent. Moreover, in the last few months lot of orders have been finalised such as the World One, World Crest, The Address, MIAL control tower, BIAL, couple of towers in GIFT city, Ahmedabad to name a few and there are a number of on-going projects too. Everything is now 2- 3 per cent more expensive with the final costs going up. For many, the margin just shrunk and others pre-planned their deliveries and got the material earlier.
On the contrary the good news is the USD is high and non-resident Indians are picking up apartments by the dozen thinking there will not be any correction in the real estate prices. NRI’s are looking for ready possession flats and not betting on long term projects.
One query still lingers on my mind. In window supply, does one charge VAT during selling or while getting paid. Should the VAT be on the amount charged on the bill or the amount actually paid by the buyer after deductions of scratches, dents, missing gaskets, etc. Imagine if the liability of the VAT is on the buyer and not the seller and the penalty for not paying the VAT on time is on the buyer!

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