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The entry tax on iron ore pellet has also been cut to 0.5% from 1 %.
In addition, the state government is cutting 2 percentage points in value-added tax (VAT) on thermo-mechanically treated (TMT) steel bars, which brings to tax to 3% from 5% previously.
The government has also reduced the entry tax on furnace oil purchased from outside the state from 10% to 5%.
“The 2% cut in VAT and 0.5 % cut on entry tax on iron ore, pig iron, steel scrap, pellets will help the steel industry, which is facing stiff competition,” SK Goyal, Shri Bajrang Power & Ispat Limited director, told Steel First.
The taxes, at their previous rates, used to hit steelmakers’ profit margins, he said.
“After this, we will have to pay less and that [savings] can be pass on to consumers,” he added.
“The state government has taken the right decision at the right time. The steel industry in the state, especially smaller players, were facing a lot of hardship to survive in the market. Some were even on the brink of closing their operations, which would increase unemployment,” he further added.
Anil Nachrani, president of the Chhattisgarh Sponge Iron Manufacturers’ Assn, was quoted by the Business Standard as saying that the state government did its job and that it was now the central government’s turn to announce measures that would benefit the industry.