Delhi UPS vendors rejoice at reduction of sales tax

UPS vendors and manufacturers have welcomed the decision of the Delhi Sales
Tax authorities to lower the sales tax on UPS from 12 to four percent--a
long-pending demand of the industry.

This would not only spur the sales of UPS, but more significantly turn the
tide against the black market which controls as much as 80 percent of the UPS
market. The earlier 12 percent sales tax was more painful in view of the fact
that neighboring states like Uttar Pradesh levy sales tax as low as two percent.
Most other states levy sales tax in the range of four percent.

A happy Sunil Bhalla, Director, Radiant Power Systems (SafePower brand),
said, "We were pleasantly surprised by the decision which was long overdue.
It will now provide a level-paying field for clean players like us." The
sentiment was echoed by Pawan Gupta, Director, Datex Electronics, "The four
percent sales tax is a welcome development since it will at least put Delhi UPS
vendors at par with its counterparts in the country."

However, states like Haryana and Punjab continue to levy 12 percent and eight
percent sales tax respectively on UPS.

Ashok Mazumdar, Executive Director, Association for UPS and Power
Conditioning System Manufacturers, said that lowering of sales tax would help to
attract UPS manufacturers back to Delhi who had migrated to neighboring states
like Rajasthan due to the lower tax structure.

For long, the UPS industry has been mired in trouble and confusion. It is a
highly fragmented industry with a large amount of business being conducted in
the gray market. One of the major reasons for this has been the lack of
organized representation. Thankfully UPS vendors have come together under MAIT
and the newly formed Association of UPS and Power Conditioning Systems and have
been making representations to various government agencies about their cause.

Since then the industry has achieved a small measure of success when the five
member CEGAT bench delivered a judgment categorizing UPS under HSN 8504 which
would be now be an electronic item as against the earlier HSN 8543 which was
then an electrical item and attracted the highest customs duty.

(CNS)