The Hindu Business Line : Goa poised for VAT reforms

Major concessions
VAT rate on IT products for inter-State sale cut from one per cent to 0.5 per cent
Industrial input list expanded further
Composition rate concession benefit extended to resellers
Tax on foreign liquor down by two per cent at par with IMFL, including beer

Panaji , April 6

Riding on the success of smooth implementation of value added tax (VAT) regime in the State in its first year (2005-06), which witnessed a massive 33 per cent growth in commercial taxes as against sales tax in the corresponding previous year, Goa is now poised to reform its VAT regime with a host of concessions on the trade and industry.

The State embarked upon VAT on April 1, 2005 with an existing average sales tax rate of 8.8 per cent only to find its coffers being flush with revenue a year after, often at the cost of local industry and trade, with a spurt in rate to 12.5 per cent notwithstanding various concessional rates.

The industry, which thrived on "sales tax holiday Raj" in pre-VAT regime was left complaining of "bleeding" and "fear of extinction."

Given this background, it was only just that the latest Budget of the Chief Minister, Mr Pratapsingh Rane, injected a liberal dose of concessions.

The major concessions included reduction of rate of VAT on IT products for inter-State sale from one per cent to 0.5 per cent, a further expansion in the industrial input list, in deference to the demand from industry, for four per cent benefit and extending the composition rate concession of half per cent to resellers.

Some of the other items, which got reduction of VAT from 12.5 per cent to four per cent are, tractor tyres and tubes as attachment to tractor, catering to canteens etc., re-sale of certified cars, lease rental.

VAT collections

The Additional Commissioner of Commercial Taxes, Mr Vallabh Kamat, told Business Line that they collected Rs 735 crore in VAT, which is gross of Rs 15 crore of export refunds and around Rs 30-40 crore of input credit, which will have to be passed on.

Buoyed by the massive growth in VAT collections, the State has embarked on a series of rationalisation plans for VAT tariffs. A reduction of the period of cash refund of unadjusted excess credit from existing two years to 12 months in the State's annual Budget, which was presented to State Assembly recently by the Chief Minister, Mr Pratapsingh Rane, has found favourable response from industry and trade.

Mr Keshav Kamat, President of Goa Small Industries Association, which represents small-scale industry in the State, told Business Line, "Moreover, the Budget has clarified that the unadjusted excess credit for cash refund would be allowed within 90 days thereof, which would allow industry to plan to utilise their funds."

The rate of tax on foreign liquor has been brought down by two per cent at par with IMFL, including beer.

With the Budget deciding to exclude the packed bottle liquor reselling dealers from the composition in the existing category and has made them pay at five per cent under separate category.

The composition scheme has been amended to raise the turnover ceiling for general traders to 50 lakh from Rs 40 lakh.

Whereas in case of restaurants, composition has been introduced by segregating liquor serving and non-liquor serving. While it is six per cent for the former, it would continue to be three per cent for the latter.

Pointing to the four per cent composition rate for contractors in the neighbouring State, the State has proposed to enhance its one per cent composition fee on the value of goods utilised to two per cent to control the leakage of revenue through refunds on account of TDS provision.

Mr Rane has made a specific provision of Rs 1.5 crore for upgrading and strengthening of the commercial tax offices to enable the department to equip itself for meeting the challenges to implement VAT effectively.

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