The Hindu Business Line : AP exempts more items from VAT, seeks Rs 85-cr relief

THE State Government, while exempting certain goods from the purview of the Value Added Tax (VAT) regime, has claimed Rs 85 crore compensation for one month due to its implementation, citing loss to the exchequer.

The Government has also extended the deadline to May 20 for submission of claims by dealers for refund of the tax already paid on stocks purchased by them earlier.

Addressing a press conference here on Thursday, the State Commercial Taxes Minister, Mr Konathala Ramakrishna, said items sold by fair price shops and books from religious institutions such as temples and churches, bio-fertilisers and items used by the disabled like Braille machines, which attracted sales tax exemptions earlier, have been exempted from VAT as well.

While tax on common salt has been withdrawn, the 4 per cent VAT levied on branded salt is likely to be lifted from July 1. These changes have been brought about to overcome the difficulties faced by traders and officials during the first month of VAT implementation, he said.

Further, military canteens whose items were hitherto exempt from sales tax, would have to pay VAT, to be collected from depots. Interestingly, the developer of the international airport and some charitable institutions, for whom the Government decided to offer sales tax exemption, would be able to have the amount reimbursed.

The Commissioner of Commercial taxes, Mr V. Bhaskar, said that the implementation of VAT in the State replacing the 48-year-old sales tax, was smooth. Further, if there were defects, they would be rectified by June end to be effective from July 1.

While pharma and plastic sectors suffered by paying 12.5 per cent tax on their input purchases, their finished products were in 4 per cent category. The Government plans to transfer the difference into dealers' bank accounts.

The minister said 671 items have been brought under 4 per cent category of VAT. The tax collection for April 2005 under VAT regime was Rs 573 crore as against Rs 570 crore for the corresponding period last year, same month. The increase in tax collection was barely Rs 3 crore and this can be attributed to VAT regime. Without VAT, this would have been Rs 114 crore.

Based on the formula adopted for compensation to States, the Centre would have to reimburse Rs 85 crore, and an application for the same has been formally lodged, the minister said.

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