The Hindu Business Line : AP fears more revenue losses due to VAT

THE State Government fears that the revenue losses on account of the value-added tax implementation would further shoot up, with the Union Government deciding to reduce the reimbursement slab to States.

Though the Union Government initially agreed to reimburse the States' losses in case of the growth rate falling below 15.5 per cent, it later reduced the figure to 11 per cent.

"The downward revision itself was expected to cause a loss of Rs 440 crore," Mr Konathala Ramakrishna, Minister for Commercial Taxes, said.

The State has already estimated that it would lose Rs 800 crore in the first year of VAT implementation. The growth rate of one per cent in revenue collections of the Commercial Taxes Department in the first three months of VAT was a case in point.

For one, the June collections were put at Rs 842 crore (for three weeks) as against Rs 900 crore last year.

"We will take it up with the committee to consider sticking to the original slab," he said.

He said the slight increase in sales tax on petroleum and diesel recently was an attempt to make up for the revenue losses on account of VAT. The ST increase fetched nearly Rs 100 crore.

He admitted to the fact that VAT had been used by certain businesses as a tool of exploitation. "They are charging more citing VAT," he said. "By and large, the implementation of VAT is smooth," he said.

Keeping in mind the nuances of a new tax system, he said the Government had decided to allow the traders to modify their returns for a period of six months. "The idea is not to punish the dealers. We will help them get used to the new system," he said.

He assured that all audits would be carried out only after prior notice. "Audit is an important aspect of the system. We are specialising in this," he said.

After the three-month review period, the Cabinet Sub-Committee on VAT would discuss the implementation next week. "We will also have discussions with dealers and chambers to get the feedback. This will help us in fine-tuning the tax system," he said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page