Kerala plans to widen scope of 'Lucky VAT'

The Kerala government is planning to widen the 'Lucky VAT' lottery scheme to include small traders also. Finance minister Thomas Isaac said that as there were requests from traders' organisations, the government would study various proposals to widen the scope of the scheme, which would benefit small retail traders too.

Although various chambers and trade organisations, including the Kerala Vyapari Vyavasayi Ekopana Samithi (KVVES), have welcomed the novel scheme, there are a lot of apprehensions among traders.

As registration under VAT is not compulsory for traders whose annual turnover is below Rs 5,00,000, a major chunk of them have not been included under the 'Lucky VAT' scheme, which is applicable only for retail traders who have VAT registration.

According to P U Jose, general convenor, Joint Action Council of Chambers of Commerce and Trade Organisations, more than 2 lakh small traders are apprehensive that consumers may ignore them and make purchases only at shops which offer 'Lucky VAT'.

"The new scheme is okay. But this will affect our business badly. We are sure that the government will find a way out," said K C Mathew, a retail provision shop-owner.

Apart from generating fears among small traders, the lottery scheme has literally caused a parallel split in KVVES, one of the strongest traders' organisations in the state. "The finance minister has divided the merchant community of the state into two," a trader of Alwaye said bitterly.

Jose said that as a number of commodities like gold, silver, cement, petrol, diesel and alcoholic beverages were eliminated from the scheme, the number of traders who would benefit from the scheme would be around 1,30,000. Wholesale dealers and hotels have also been excluded from the 'Lucky VAT'.

A senior official of the commercial taxes department said that the government was planning to introduce a scheme to facilitate small traders to register under the VAT Act and enjoy the benefits of the lottery scheme.

"The government plans to provide registration for a nominal fee of Rs 250 to small retail traders," he added.

In addition to more revenue through the registration fee, more traders will come under the tax net by the move.

Though the government has no plan to collect tax from these traders, they will have to keep their records as per the VAT Act. Undeterred by the possibility of their coming under the scanner of tax officials, a large number of traders are ready to take the advantage of the offer as they want to be included in the 'Lucky VAT' scheme.

Trade organisations expect a decision from the government in this regard soon.