Delhi, Maharashtra likely to fix bullion Vat rate at 0.25%
Delhi and Maharashtra might lower valued added tax (Vat) rate on bullion to 0.25%, as consensus on introducing uniform floor rate for precious metals seemed difficult to be arrived at in the empowered committee’s meeting on Wednesday.
“At the moment, consensus does not seem to be emerging on the issue at the Vat panel’s meeting on Wednesday. If that happens, we will reduce Vat rate on bullion to 0.25%,” Delhi finance minister AK Walia said during the meeting of the sales tax commissioners of the Vat-implementing states here.
“We will first try to evolve consensus on the issue, but if that does not happen, we will be forced to lower the Vat rate on bullion,” Maharashtra sales tax commissioner BC Khatua said after the meeting.
The meeting, attended by empowered committee chairman Asim Dasgupta and secretary Ramesh Chandra, provided a forum for an interaction among sales tax commissioners of different states prior to detailed discussions with the finance minister on Wednesday.
Bullion trade is shifting from Delhi and Maharashtra to Rajasthan and Gujarat because of the difference in the tax structure on precious metals.
While Delhi and Maharashtra have 1% Vat rate on bullion, Rajasthan and Gujarat levy 0.25% sales tax on it.
8/11/2005
Tripura comes first in getting compensation for Vat loss
In the first case of Vat compensation, the finance ministry has sanctioned Rs 4.89 crore for the Tripura government to offset the revenue loss caused by the new multi-point value-added tax during the first quarter of this fiscal.
The ministry, which has provisionally earmarked Rs 5,000 crore to nullify the adverse impact, if any, of Vat on the states’ revenue growth in the whole year, is close to sanctioning a larger claim of Rs 193.8 crore by Andhra Pradesh, according to officials.
Maharashtra, which had reportedly pitched for a compensation of about Rs 400 crore to make good the Vat-induced deceleration in revenue growth in Q1, however, has not made a formal claim yet. “We are yet to receive any full-fledged Vat claim in the prescribed format other than from AP and Tripura,” said a senior finance ministry official.
The tax revenue of ‘Vat states’ had shown an average growth of 12% during Q1, with a higher growth of over 15% in June, when the implementation became more or less uniform and stable. This growth rate has kept pace with the historical growth rate of sales tax revenue in most sates, barring a few like Andhra and Maharashtra.
Source: financialexpress.com
7/20/2005
Vat about Kerala’s hype of doubling tax revenues?
The modest 6% growth in post Vat tax revenue in Q1 has thrown Kerala into a necessary-but-not sufficient tension. The tax revenue growth could well make the state forfeit its claim for compensation on Vat losses, while the pace of growth, so far, is not sufficient to justify the radical shake-up in the system.
In fact, early estimates could be embarrassing for the government. Based on a study of 85 revenue-earning items, the state government had estimated value-addition to the tune of 30-100% during the first and last point sales. This is a far cry from what the first tidings show. Instead of the Rs 73 crore gain registered in Q1, a path of revenue fall would have led the state to a compensation of Rs 850 crore from the Centre. And this where the Vat shoe pinches.
It is hard to believe the 6% growth was possible purely because of Vat, says KN Harilal, faculty, Centre for Development Studies. One, the sales tax collection process in Kerala had been in a slump recently and the lower base would make even the slightest growth show a significant impact. Two, the state economy is undergoing a visible boom. Instead of being a performance indicator of the Vat benefit, the revenue growth could well be an underestimated index of the rise in trade volumes.
More: financialexpress.com
6/18/2005
INDIA: Haryana cotton mills oppose VAT
Cotton yarn mills in Haryana state announced on three-day strike to protest against imposition of market fee on cotton and Value Added Tax (VAT) on cotton yarn.
O P Mata, President North India Rotter Spinner Association stated that the Government has imposed these additional taxes in the Haryana state, however there is no VAT on cotton yarn in Delhi and Rajasthan Government has fixed only two per cent VAT.
Mata informed that the cotton yarn was already in the field of sales tax in the state.
Further, he explained that already the cotton mill owners are suffering through sick business time and economic problems due to slump in economy and trade rivalry.
If the taxes at the rate of 4 percent would be imposed on the market fee on cotton and VAT on cotton yarn the industry would be completely cleaned out, he added.
Source: bharattextile.com