VAT’s in a slogan?

These days, it has almost become an unwritten rule that whenever a new scheme is launched, a catchy slogan has to be attached to it. Thus, it is not surprising that the Department of Trade and Taxes, Delhi, has introduced an award Scheme for the general public and has christened it “ Bill Banvao, Inaam Pao ” (Make a bill, get a reward).

The scheme in itself is simple enough. One has to obtain a legitimate invoice (by whatever name called) on purchases for a minimum amount of ₹100 or more. The purchaser may upload the details of the invoice on the department’s website or may WhatsApp it to a designated number.

A unique ID would be generated and sent to the customer as an SMS. The invoice should contain the Tax-Payer Identification Number (TIN) of the selling dealer besides the full name of each item, rate of tax charged against each and total sale value.

The purchaser uploading the details of the invoice should mention his/her name and either mobile number or email. The payments to the winners would be directly credited to the bank account of the purchaser after verification of the purchases from the sellers through ward VAT inspector.

A computerised draw of lots on the basis of the unique ID’s will be held by the department on the 15th of the succeeding month. Up to 1 per cent of the number of entries received in any month can win an award. The prize amount would be five times the taxable value of the goods purchased in the bill subject to a maximum of ₹50,000.

The scheme has been launched initially for a year and is subject to periodic review. Before releasing the prize money to the winner, the department will get the concerned bills verified from the sales accounts of the selling dealers within 10 days of the draw.

There’s also a bit of social and consumption engineering thrown in. For example, invoices relating to purchases of motor vehicles, liquor, petrol, diesel, ATF, PNG, CNG, LPG and LPG cylinders are not eligible for participation in the scheme.

At its core, the scheme appears to be an excellent one as it offers a cash incentive to legitimise transactions at the lowest possible level of black money cash generating units. If the black money menace is to be curbed (eradication is but a distant dream), a bottom-up approach is ideal since the menace has to be curbed at the lowest level of generation and curbing it at the top level is an assured exercise in futility.

Dealers expecting an across-the-board Input VAT Credit file their applications for credit more in hope than in expectation. Any denial of credit would force them to opt for an invoice-less transaction.

The incentive amount of 5 times the taxable value of goods is a good enough carrot. A tax inspector will verify the invoice details before the amount is credited which makes it clear that this scheme has been rolled out to gather an authentic data base of dealers who avoid taxes.

However, such schemes cannot last for ever — the Delhi government would have to be vigilant once the Incentive Scheme is over. They will have to ensure two things — that the dealers continue to issue invoices without the incentive and that their officers do not get incentivised privately by the dealers for not issuing taxable invoices. If implemented properly, this scheme is worthy of being rolled out pan India.

The writer is a chartered accountant

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