MP government to alter VAT rates on its own

The MP government has decided to fix value added tax rates at its own discretion. The tax rates will go up or down depending on the demand of traders, the state government today said.

Since the Centre was not compensating the state on value-added tax losses, it has no option but to reduce or increase the tax rates, the government added.

"We met 23 trade and industry bodies, who demanded further tax cut. But we will slash the VAT further on certain items and will compensate by increasing entry tax on those items since the central government is neither ready to abrogate the central sales tax nor compensate for the VAT losses. The Centre will compensate losses to the extent of 50-75 per cent," Minister for Industries and Commercial Tax Babulal Gaur said.

When asked as to whether he had taken the permission of Empowerment Committee on VAT before raising entry tax on certain items like cooking gas, he said, "We have not raised the tax," though the raise has become effective from March 3 through an ordinance, a copy of which is available on the commercial tax department website.

Rates of a number of commodities are flaring up in the state owing to the increase in entry tax and confusion over the VAT.

"We will increase revenue through various means. Our tax collection revenue has reached 5000 crore this year and will go up further," said the minister, adding, "sales tax and commercial tax has gone up by Rs 1,500 crore."

A number of traders including MP Dal Chawal Vyapari Sangh (rice and pulse), MP Plastic Scrap Association, Indore Hardware and Paints Merchant Association, Joss Stick Manufacturers, Potato Chips makers, Krishi Upkaran Nirmata Sangh (Agri Equipment Manufacturer Association), Bhopal Chemist Association, MP Roto Moulders Association and Handloom Association Indore have demanded from the government to reduce the VAT from 12.5 per cent to 4 per cent or keep them out of the ambit of the VAT.

The state government has formed a sub-committee on the VAT headed by Babulal Gaur, Finance Minister Raghavji and Forest Minister Himmat Kothari.