Tamil Nadu Chamber of Commerce and Industry has urged Chief Minister Jayalalithaa to issue a clarification on value-added tax (VAT) rates being imposed on generator sets.

In a statement, it said that the enforcement wing of Commercial Taxes Department was detaining consignments of generator sets, stating that they attracted 14.5 per cent VAT rather than 5 per cent. In 2008, VAT on generators was reduced from 12.5 per cent to 4 per cent.

However, now with the power crisis having reached enormous proportions, it was critical that the State government granted tax exemption to generators rather than add to the problems by imposing higher tax. There was confusion between tax rates applicable to generators and generator sets even though both were used only for captive power generation and the only difference being one was used by small industries, and the other by large industries with huge power requirements. The Minister for Commercial Taxes and Commissioner and Secretary must issue a circular clarifying that generators and generating sets were taxable only at 5 per cent VAT.