Tax compliance rises in VAT states, politics rules elsewhere
While states that have implemented VAT are seeing greater and growing tax compliance, thanks to the broadbased nature of the new tax system, non-VAT states have all the basics in place to join the bandwagon. But for the politics.
Faced with the reality that VAT is pushing up revenues, industry and government officials in non-VAT states are now speaking out in favour of VAT. Here is what some of the states (both VAT as well as non-VAT) have to say:
HARYANA: Haryana was first to implement VAT. Tax collections have already increased and are registering a further hike in the state. The total revenue generation has shot up by 28 per cent, post VAT. The government had also issued Traders Identification Number (TIN) to 1,20,000 traders. ‘‘VAT has quite effectively checked tax evasion,’’ remarks Yudhvir Singh, additional commissioner, Excise and Taxation.
More: indianexpress.com
7/6/2005
VAT effect begins to show, states’ revenues soar
Three months after the value-added tax (VAT) touchdown, the states have reason to be happy. Sure, there have been implementation issues, including confusion on categorisation of products, but that is overshadowed by a jump in revenue collection thanks to greater compliance.
This is putting more pressure on the non-VAT states to relook their stand of not joining the new tax system. For now, geography is ensuring that the BJP-ruled states and Uttar Pradesh are not losing out on the business front. But as the good news becomes a flood, that will change.
Source: indianexpress.com
VAT: Govt extends plan for small traders
THE Delhi Cabinet today decided to extend the composition scheme for VAT dealers up to July 25. Dealers with taxable turnover up to Rs 50 lakh will have to pay 1 per cent tax.
The Cabinet decided to extend the date as many small-time dealers volunteered for the scheme, which was initially valid till the end of June.
The Cabinet approved an amendment to Rule 5 of the Delhi Value-Added Tax rule-2005, enabling dealers to opt for the scheme for 120 days.
More: cities.expressindia.com
7/1/2005
Now, branded schools to be taxed
In its effort to look for new revenue sources, the sales tax department has now zeroed in on franchisees. The department will now charge 4 per cent tax on entities including schools and restaurants that use international or nationally - recognised brand names.
Delhi government can levy this tax under the Right to Use Act that has been implemented since September 2004. ‘‘Under the tax we can charge schools like DPS or eateries like Barista and McDonald’s. We will soon be issuing notices to them,’’ sales tax commissioner R K Verma said.
The tax applies to those businesses or institutions with a turnover of Rs 5 crore and above. The Act entails a 4% tax on rented products and services including mobile phones, cars, furniture, office equipment and machines.
The tax is levied on the rent that the consumer pays and will be collected by the sales tax department. This has now been extended to renting out of ‘brand names’ by the department.
VAT panel to take stock in mid-July
The empowered committee of state finance ministers will meet in the middle of July to take stock of the situation three months after implementation of VAT.
The panel has reverted back to the states on implementation issues and has also asked them to submit the revenue collection figures to the Panel by July 5. This will enable the panel to take stock of the states’ revenue collections.
In cases where there are losses, the panel will look into the compensation formula. According to Empowered Committee Chairman Asim Dasgupta, the panel will meet by middle of July.
But, empowered committee member secretary Ramesh Chandra said the meet would discuss compensation formula for those states making losses because of VAT implementation, impact of new tax system on prices and ways to make VAT more consumer-friendly.
More: indianexpress.com
VAT deviations to cost Delhi dear
After assuring support initially the Union finance ministry seems to be back-tracking on the issue of compensation to states implementing value added tax (VAT).
In a letter dated June 20, the Centre’s sales-tax director has asked states to certify their projections and collections by state attorney generals and exclude alcohol and petrol from the collections. The most worrisome factor for states, especially Delhi is that the list of items accepted by all states in November will be considered as final. Delhi has in fact, deviated a large extent from the list with changes being made till last month. According to sources, some more are in the offing and are likely to be cleared by the cabinet next week.
While the authorities remain tight-lipped about the details, sources said the letter has clearly stated that deviations will amount to disqualification from compensation. The ministry had promised 100% compensation in the first year of implementation of VAT.
When contacted the sales-tax commissioner R K Verma said: “We don’t need compensation from the Centre, provided we don’t deviate further.”
6/29/2005
Sun offered money and job: Bahree
Fresh details on the recent BPO case emerged out of the hand written statement released by Karan Bahree, on Monday. Bahree mentioned that along with the payment of a sum of $5000, he was was also promised a job by the under cover reporter in ‘Sun’.
Divulging details of the letter, Infinity Esearch’s lawyer, Deepak Masih said, Bahree was paid 5000 US dollars for a “presentation to a person by the name Oliver,” which was arranged by Fayaz Rizvi, who was apparently, Oliver’s colleague.
“I was introduced to a person called Fayaz Rizvi by Sameer, an acquaintance whom I know for the past six months. Fayaz offered me a part-time job as well. Since I am good at communicating in English, he wanted me to give a presentation to Oliver,” the letter said.
The letter further stated: “Fayaz wanted a presentation about the call- centre operations in India. He even directed me on how the information was to be presented, after which I was asked to collect the payment. At a charge of 3 pounds for every piece of information, the total sum he paid 5000 US dollars (Rs 2.15 lakh).”
6/25/2005
Exporters plead VAT exemption
After tyre, bullion and LPG dealers, it is the turn of exporters to seek relief under Value Added tax (VAT).
Delhi Exporters Association on Thursday met with chief minister Sheila Dikshit and finance minister A K Walia to seek exemption under VAT.
Walia said that their petition would be considered. “We will take this to the Empowered Committee and if all states agree we will exempt traders,” the minister said.
Association president S P Agarwal said that exporters had not been paying sales tax earlier.
“Some traders work on very narrow margins that have been stretched to the limit under VAT,” he said.
Under VAT, the traders had to file returns and seek refund which under VAT will be given within a month. The traders felt that they would be caught in red-tape trying to get their refunds.
Agarwal added that India had only 0.7% of the world’s export trade share and faced tough competition from countries like China.
“In every country there are tax benefits and facilities given to exporters to encourage them. Here it seems like the opposite,” Agarwal added.
VAT department officials however said that this was just an attempt by the traders to evade tax.
States yet to claim for revenue loss from VAT implementation
OF the 20 States that introduced state-level value-added tax (VAT) from April 1, not even one has till date approached the Finance Ministry for compensation of any revenue loss from VAT implementation, a senior Finance Ministry official has said.
Under the VAT design that has been implemented, States can make a monthly claim to the Centre for compensation of the revenue loss, if any, arising from VAT implementation.
The Centre would go by the certification of the accountant general of the State concerned for processing the compensation claims.
The Finance Ministry however contends that these are “early days” to come to any conclusion that the VAT implementation has led to revenue buoyancy in the States that introduced VAT from April 1 and therefore no claims for compensation have so far been made on the Centre.
“A reasonable picture on revenue buoyancy would emerge only after couple of months. A decision on CST is likely only at the end of the current year,” the Finance Ministry official said.
More: thehindubusinessline.com
6/18/2005
VAT
The Empowered Committee will ask the Haryana Government to raise VAT rate on automotive tyre and tube to 12.5 per cent from the existing 8 per cent in line with other states, according to tyre dealers in Delhi.
A delegation of Delhi Tyre Dealers’ Association today met state Chief Minister Shiela Dikshit and Finance Minister A K Walia with their demand that the state should reduce VAT rate on tyre and tube to 8 per cent since Haryana is “adamant” on not increasing the rate to 12 per cent.
Association President G S Dhingra said Walia talked to Empowered Committee Chairman Asim Dasgupta, who assured him that the VAT panel will ask Haryana to bring uniformity in VAT rates on tyre and tube.
According to the association, Walia also called on Haryana Finance Minister Virender Singh.
Singh assured the Delhi Government that he would act on this issue immediately after June 20 after the budget session is over.
Haryana Government on May 4 had promised to increase VAT rate on these two products to 12.5 per cent, but has not issued any notification to this effect.
The association threatened to resort to agitational methods if their demand is not met.
While Haryana could be persuaded to increase VAT rate to 12.5 per cent, the association’s demand for reduction of VAT rate by Delhi government to 8 per cent may not buy many takers since there is no provision of this slab under VAT in its present form.
Source: outlookindia.com