Uttar Pradesh government is keeping alive the issue of Rs 531 crore it has demanded from the Centre to compensate the loss of revenue due to implementation of Value Added Tax (VAT) and reduction in central sales tax rates.
UP had implemented VAT in January 2008. While, the demand for compensation pertaining to VAT stands at Rs 190 crore, the compensation pertaining to central sales tax rate reduction is Rs 341 crore.
“The issue is alive and the correspondence is on with the centre,” UP Commercial Tax Commissioner Chandra Bhanu told Business Standard.
Bhanu said the Centre had requisitioned the Auditor General’s report regarding the compensation demand, which had been complied with. “We are persistent with our demand for compensation,” he added.
Meanwhile, the government also claimed the Centre had also not released funds to the tune of over Rs 6.60 crore for setting up the necessary IT infrastructure for the proposed Goods and Service Tax (GST) to provide the facility of online filing of returns and downloading of different forms by the tax assesses.
So far, UP had incurred about Rs 25 crore on IT platform for tax administration, of which over Rs 18 crore were to be borne by the Centre.
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In the recent empowered committee meeting of state finance ministers in New Delhi, UP representative state commercial tax minister Nakul Dubey had raised issues related to the GST.
According to the government, the Centre announced several schemes to compensate the states during change in tax system. However various curbs were introduced at the time of release of compensation packages.
The government maintains per se it was not against GST, but only wanted a unanimous structure for the liberal tax system be prepared before necessary amendments were effected in the constitution.
The state government has suggested the threshold limit for traders and manufacturers in the central GST be fixed at Rs 3 crore against the proposal of Rs 10 lakh by the Centre.
UP said if the threshold was kept at Rs 10 lakh, even the small enterprises would come under the tax purview which hitherto did not attract central excise duty. The state is also supportive of keeping the petroleum products out of the GST purview.
Besides, the government wants the authority to keep certain items tax-free under GST regime which had already been exempt from VAT. The Centre on the other hand proposed to exempt only 99 items from GST.
The next empowered committee meeting is likely to be held by the end of this month.