Record rise in VAT collection in Kerala

Kerala has achieved a 52.5 per cent rise in the collection of a record value added tax in 2006-07. This was way ahead of the national average of 30 per cent, Thomas Isaac, Kerala minister for finance, told reporters here.

Buoyed by this, the finance ministry has set a VAT collection target of Rs 6,100 crore, up 35 per cent on last year's collection of Rs 4,500 crore. The minister also anticipated a sharp increase in the collection of stamp duty, which crossed Rs 2,000 crore.

The government has targeted an average growth of 25 per cent in tax collection for the next few fiscals so that fiscal management of the state was in the right direction. Isaac's aim was to eliminate the revenue deficit in the state's budget by 2010.

The state's ratio of revenue expenditure to state domestic product is presently 19 per cent and this will be brought down to 17 per cent this fiscal. Similarly, revenue receipts to GDP will be enhanced to 16 per cent from 13.5 per cent.

To achieve the revenue targets the ministry will go in for computerisation. In the next three months, all offices of the tax department including the check posts will be computerised. The department will go completely online within the next six months.

Spot inspections and raiding of commercial establishments will be minimised as the computerised system will enable officials to verify collection online using the Tax Index Number (TIN). The government has also instructed that those paying Rs 25 lakh and above have to file e-returns.

Isaac said that the government had no plans to cut the 4 per cent tax on gold although there is pressure from gold merchants to cut this to 1 per cent.