MP dithers on VAT implementaion

While chief minister, Babulal Gaur is awaiting party high command's nod to implement the contentious Value Added Tax (VAT) regime in the state, the senior officers in the Commercial Tax department are too keen for its implementation at the earliest.

They feel that if the government further delays the implementation of VAT, the state will miss the benefit of Central reimbursement for the tax losses due to VAT implementation in the first three years.

As per the VAT agreement, the Central Government will reimburse 100 percent revenue loss to states in the first year, 75 percent in the second year and 50 percent during the third year.

As a year has already passed since VAT implementation, the 100 per cent revenue loss will no more be refunded. Moreover, even as the state government dithers on VAT implementation, state industrial units are facing heavy losses.

Under the VAT regime, industries are not required to pay the four percent input tax, which they are paying to the commercial tax department. In the States where the VAT is already in force, the industries are enjoying this tax benefit.

Though commercial tax commissioner Pramod Kumar Das refused to comment on the issue on the plea that this is a political decision, he said that the department is fully prepared to implement VAT once it is okayed by the state government.

"The officers have been trained and the department has been fully computerised. We have just to fine tune the system", Das said. "Since VAT is a more scientific and modern form of tax collection, why should the government delay in implementing it in the state?" a senior commercial tax official said.

"It is a sound system which discourages competition among the states on tax reduction as there will be uniformity in tax collection under VAT," he said. "It is not for nothing that VAT is in force in more than 140 countries the world over," he added.

Officials are of the view that the manufacturers and traders, who have been dealing with the VAT system in other states, are now pretty familiar with the new system and differences have been ironed out. Many traders feared that they have to keep several accounts under VAT.

But the fact is that they do not have to show any bills to the department unless they have been chosen for the detailed inquiry. Otherwise, the assessment submitted by the traders is considered deemed assessment under this self-regulatory tax collection mechanism.

Moreover, as a senior official in the tax department points out, the implementation of VAT is bound to bring down tax evasion drastically, the only thorny point yet to be resolved is the Central Sales Tax.