VAT panel wants finance ministry to monitor prices
The empowered committee on VAT has requested the finance ministry and other other ministries concerned to monitor price level of VAT commodities even though general prices have come down after the new tax regime was implemented in 21 states.
The consumer price index has come down from 5 per cent in April to 3.7 per cent in May and further to 3.3 per cent in June, Empowered Committee Chairman Asim Dasgupta said after the VAT panel meeting on Wednesday.
But the committee is concerned in cases where prices have risen even after reduction in VAT rates compared to sales taxes. ‘‘Index is an average concept. Prices of some commodities have risen. We are particularly concerned about those commodities, where prices have gone up despite reduction in VAT rates,’’ Dasgupta said.
He said the panel has requested finance ministry officials and other ministries concerned to hold meetings to monitor prices of VAT commodities. On passing the benefits by manufacturers to the next stage, he said it is not happening countrywide.
To a query whether punitive action would be taken against those not factoring in VAT in maximum retail prices (MRP), Dasgupta said the panel would recommend such action only after discussions with the finance ministry. However, persuasive efforts do also bear fruits, he added.
Besides prices, another issue affecting quality of VAT is non-issuance of cash memos and invoices, he said, adding trade associations and chambers have assured the VAT panel that they would be cooperating with it on this matter. He said revenues of states have gone up after the implementation of VAT.
8/24/2005
40% Drop In Business Due To High VAT Rate In AP
The Federation of All India Tea Traders Association (FAITTA) and Indian Tea Association (ITA) appealed today to the Andhra Pradesh Government to implement uniform VAT rate of four per cent on tea as recommended by the Empowered Committee (EC) of state Finance Ministers.
While this recommendation was accepted by many States including West Bengal, Assam, Delhi and Karnataka, Andhra Pradesh was still to implement it, leading to a 30-40 per cent drop in business in the state, tnhey said, adding, as a result, tea, an acknowledged common man’s drink in India, would now become dearer.
The associations said in a joint statement that classifying tea under 12.5 per cent category in a few States would deny level playing field for consumers and traders, which could lead to unhealthy trade practices. The high rate of VAT within the State of AP had resulted in increasing cross-border infiltration from neighbouring states, which had cheaper VAT rate on tea. Landed price of tea in states placing tea in 12.5 per cent category was expected to be over 16 per cent, which might result in price hike by 8-12 per cent, amounting to a rise of Rs 10-20 per kg compared to neighbouring states.
With 40 per cent of market under “loose tea” small and local traders would be adversely affected and the State would lose business in the long term, they said.
7/25/2005
Centre may revise VAT rules on imports
The official panel on Value Added Tax, which had suggested that states be allowed to tax imports, on Friday said the Centre was examining the constitutional position on the recommendation.
“We have suggested to the Centre that states be allowed to impose Vat on imports at not more than four per cent,” Empowered Committee Secretary Ramesh Chandra said, adding the Centre was examining the suggestion and constitutional provisions in this regard.
“Allowing states to impose Vat on imports requires clear guidelines as to which state will impose the tax and which will give the input credit if the commodity is imported by one state and sold in another,” he said at a conference organised by All India Management Association.
CST may be reduced to 2% by early next year
The central sales tax rate could be reduced to 2% early next year in the phased removal of the levy. Addressing a seminar organised by the All-India Management Association on implementation issues of (VAT), member secretary of the empowered committee of state finance minister Ramesh Chandra, reduction of CST from 4% to the proposed 2% could come through a central government notification.
He said there was considerable resistance from the states, particularly those with large manufacturing sector, to the proposed reduction as they were beneficiaries of the CST receipts. All the states together get about Rs 20,000 crore as their share in CST collection. The amount could be reduced to half when the CST rate is cut to 2%.
Mr Chandra also said that the committee has asked the finance ministry to consider empowering the states to tax imports and bring it under 4% VAT. The proposal would, however, require a constitutional amendment as the import can be taxed only by the Centre.
7/18/2005
Maharashtra FM Patil Assures Of VAT Reforms
Maharashtra Finance Minister Jayant Patil today assured traders that the Government will make suitable changes in Value Added Tax (VAT) to remove difficulties faced by the traders.
Addressing a State-level convention of traders here today, Mr Patil said divisional committees will interact with traders to know their difficulties and, accordingly, changes would be effected.
The process in this regard would begin after the end of ongoing Assembly session, he said.
Mr Patil reiterated that VAT was introduced by the State Government in the best interest of both the consumers and the traders. Once implemented fully, it will certainly offer the benefits, he said.
More: indlawnews.com
7/16/2005
Uttaranchal to implement VAT regime
Uttaranchal principal secretary (finance) Indu Kumar Pandey has said Uttaranchal is now preparing itself “for a smooth transition"to the VAT regime.
The draft Act was circulated and necessary changes made on the basis of feedback received, Pandey said at a roundtable meet on building a consensus on VAT, organised on Tuesday by the Confederation of Indian Industries (CII).
He said the state government was aware of the importance of procedural issues related to VAT implementation and was in touch with the governments of Punjab and Himachal Pradesh to draw upon their experiences.
Speaking at the meet, Ramesh Chandra, member secretary of the Empowered Committee of the state finance minister, said the unique character of this hill region should be kept in mind while taking a decision on implementation of VAT.
7/15/2005
Smuggler’s choice: Azaadi VAT se
Requests, incentives, warnings, raids, nothing but nothing can desist our coutrymen from trying their hand at tax evasion. The richer the man, finer his skills of escaping the tax dragnet. Now, instances of Kanpur based jewellers smuggling gold from Rajasthan and Maharashtra, to avoid paying tax, is giving the cops as well as the state government sleepless nights.
The Value Added Tax (VAT) has a significant role to play in luring the city jewellers to the path of crime. In the BJP governed states VAT is negligible. Therefore, in Rajasthan one has to pay only 20 paise, while in UP the VAT amounts to Re 1 on purchase of gold jewellery worth Rs 100. During transaction of large quantities of gold, the aggregate of VAT payable is far higher in UP compared to Rajasthan. “If VAT is implemented uniformly in every state, inter-state smuggling of gold can be curbed,” says jeweller Ravi Kapoor.
Previously gold rates use to differ from country to country. Due to this smuggling of gold was rampant in India. The yellow metal was smuggled into the Indian market via Kathmandu. “After the standardization of gold rates in the international market gold smuggling almost came to an end. But implementation of VAT in states other than those governed by the BJP once again has provided impetus to inter-state gold smuggling,” informs a senior official of Central Excise and Custom Department on condition of anonymity.
7/14/2005
Govt reduces VAT on daily items to 4 per cent
CONTINUING with its rollback spree, the Delhi government today decided to bring down VAT rates on household commodities from 12.5 to 4 per cent. According to Finance Minister Dr A K Walia, ‘‘the decision was an important bonanza for Delhiites, especially for women and the poor.’’ He said this rationalisation of tax rates will go a long way in making VAT more people-friendly.
The commodities include tea, cutlery, lunch box, bottle, tray, basket, comb, jug, soapcase, mug, toothbrush, mat, tub and drum up to 100 litre-capacity. Fittings for door, windows, mirrors, photo-frames, packed flavoured milk and yoghurt, additives, welding equipment, glue and adhesives will also be levied with a 4 per cent VAT. Meanwhile, vadis, plates and cups made out of leaves, and manual and animal-driven agricultural equipment spares have been exempted of VAT.
Source: cities.expressindia.com
7/11/2005
Gujarat still sticks to its guns
The Gujarat government is in no mood to implement value-added tax (VAT) despite the fact that VAT states have experienced a 12-15 per cent rise in revenues during April-June 2005. Gujarat, on the other hand, claims it has registered a 25 per cent increase in Sales Tax during the same period.
Reiterating the old stance, state finance minister Vajubhai Vala said, “Gujarat would implement VAT if all the states together decide to move over to it. However, the Centre must ensure all states switch over simultaneously.”
So far, no BJP-ruled state has moved to VAT, apart from states like UP and Tamil Nadu. “The states that have implemented VAT will soon realise that in the long run they stand to suffer if the system is not implemented together,” he explained. The state’s special commissioner, Sales Tax, Raj Kumar, who will attend a review meeting on VAT in Delhi on Saturday, is expected to ask the Centre to ensure consensus among all states on the issue. Vala claimed that revenue in other states rose under VAT because of high evasion of Sale Tax through underbilling. “This is not the case in Gujarat,” Vala asserted.
“The industry in Gujarat may gain with VAT as it would get the set off for its sales of finished products. However, the state exchequer would lose because collections would be lower than under the Sales Tax regime,” Vala said.
7/9/2005
VAT surprise: More moolah
Three months after the value added tax (VAT) system was introduced amidst controversy in Delhi, the government has reaped rich returns.
Putting naysayers on the back foot, the department has collected Rs 478 crore for June 2005.
This is 30% higher than sales tax collection under the previous tax regime for June 2004.
Incidentally, only 6,000 traders whose annual income is above Rs 5 crore have filed their returns as opposed to 15,000 traders who filed monthly returns last year.
Department officials expect to rake in the moolah when all 1.5 lakh registered traders will file returns next month.
“Our monthly collections are up by 30% while the cumulative collection has increased by about 25% from Rs 1207 crore for April-June 2004 to Rs 1509 crore in 2005 so far,” R K Verma, sales tax commissioner said.
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