The Hindu Business Line : `States with VAT in place may earn higher revenues'

BULLISH ON REVENUES: Mr Ramesh Chandra, Member-Secretary, Empowered Committee of State Finance Ministers on VAT, addressing a workshop on `Value-added tax - Issues and concerns' in the Capital on Wednesday. - Kamal Narang

New Delhi , Aug. 31

TAX revenues of value-added tax (VAT) implementing States are likely to register a robust growth in the second quarter of the current fiscal despite the disruptions caused by the rains that lashed Mumbai in the last week of July.

"We expect the second quarter tax revenues of VAT implementing States to increase by not less than 18 per cent despite the Mumbai rains," Mr Ramesh Chandra, Member Secretary of the VAT Panel, told presspersons on the sidelines of a workshop on VAT organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Mr Chandra also said that the provisional data available with the empowered committee of State finance ministers on VAT indicated that tax revenues of VAT implementing States have grown by an average 20 per cent in August 2005. For July 2005, he said that the growth rate has been around 12 per cent.

In the first quarter of the current fiscal (April-June 2005), the tax revenues of VAT implementing States registered a 15.3 per cent increase to touch Rs 14,050.81 crore as compared to Rs 12,184.31 crore in the same period last year.

Tax revenues of VAT had grown by 21 per cent in June 2005, which was considered as the first normal month of implementation of VAT.

Earlier, addressing the workshop, Mr Chandra mentioned that he had two main concerns (both as a consumer and on behalf of the VAT panel) on VAT implementation - the benefit of input tax credit was not being passed on to consumers and the reluctance in issuance of cash memos.

"Why should I (as a consumer) be in favour of a reform (VAT system) if I don't stand to benefit from it? If there is a benefit, why is it not coming to me?," Mr Chandra asked, while adding that as a consumer he would also like to benefit from VAT implementation.

On the issue of cash memos, he said, "whatever you may say, we are not issuing cash memos". Mr Chandra said that there is collusion between the consumer and the retailer.

"The consumer is happy if he can buy an item without a cash memo. Unless these two things are done, the full benefit of VAT cannot be realised by the society," he said.

He also said that empowered committee was not opposed to Karnataka's wish of bringing down the VAT rate on coffee powder from 12.5 per cent to 4 per cent. "In their wisdom, if Karnataka wants to reduce the VAT rate on coffee powder, empowered committee would not frown upon it," Mr Chandra said. A decision to this effect was communicated to the Karnataka Finance Minister during the VAT panel meeting held here last week.

As regards the issue of price monitoring on Maximum Retail Price items, Mr Chandra said that the VAT panel had already held discussion with the Ministry of Consumer Affairs at the level of a joint secretary level official. He said that the MRP issue would now be taken up at the level of the consumer affairs Minister.

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