The Hindu Business Line : States can exempt traders of turnover up to Rs 10 lakh from VAT

STATES have now been granted the leeway to exempt dealers with gross annual turnover of up to Rs 10 lakh from coming under the value added tax (VAT) net from April 1.

This is double the turnover ceiling of Rs 5 lakh that was proposed in the original VAT design and also mentioned in the white paper on State-level VAT prepared by the Empowered Committee of State Finance Ministers under Dr Asim Dasgupta.

"We have agreed to give States the option of not making it compulsory for registering dealers with turnover of up to Rs 10 lakh per year. It is for the States to fix threshold limits within this overall ceiling. Some States may choose to exempt dealers of up to Rs 2 lakh, while others may prefer going up to even Rs 10 lakh," officials said.

The latest decision, which would take out a substantial chunk of small dealers out of the VAT net, is seen to be a political bargain to bring all States on board; to enable successful implementation of the new tax regime to replace the existing sales tax system from the coming fiscal.

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