The Hindu Business Line : Seven States may participate in tax info exchange project

AT least seven States are likely to participate in the trial run of the TINXSYS (Tax Information Exchange System) project beginning from October 1, a senior VAT panel official has said.

"Initially we expected around more States to participate in the trial run. But now States such as Bihar (which has elections) and Madhya Pradesh are not in a position to do so. Our estimate is at least seven would participate in the trial run from October 1," Mr Ramesh Chandra, Member-Secretary of the VAT panel, told Business Line here.

The TINXSYS project, which is being implemented on a build, own, operate and transfer (BOOT) basis over five years, would primarily facilitate information exchange between the sales tax/VAT departments across the country and help establish a database for all inter-State transactions.

The information exchange system would also help verify and track inter-State transactions and curtail the scope for tax evasion.

Mr Chandra said that data relating to various States were now being fed into the system. He said that the States have also been asked to confirm the correctness of the data that was added into the system.

"The problem is some States have changed the data at the time of verification. Further, States like Madhya Pradesh had their information in Hindi. They have been asked to translate it into English," he said.

Meanwhile, the Empowered Committee of State Finance Ministers on VAT is to meet here on October 5. On the Centre's latest move to stipulate mandatory filing of declaration forms (Form C, F, E-I and E-II) on inter-State transactions on quarterly basis, Mr Chandra said that this should be seen as part of a reform process and not linked to implementation of the State-level value-added tax (VAT).

"The quarterly filing norm is more linked to the information exchange system project that is being put in place," he said.

A senior Finance Ministry official said that the move to stipulate quarterly filing of declaration forms for inter-State trade transactions was part of the central sales tax (CST) reform process.

"We cannot move to a 2 per cent or zero per cent CST regime unless there is quicker flow of information into the new tax information exchange system that is being set up. If there is to be some proper use for the new system, then we cannot have a situation where information is available after a year," the official said.

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