Govts compound VAT problem in MP

Despite the Centre's claim to make commodity prices uniform all over the country, the previous value-added tax in MP, imposed by the Congress government in the state, at 9.2 per cent, is creating confusion in Madhya Pradesh. Having introduced VAT, the state government has made no efforts to apprise traders of its various slabs.

Ironically, when the tax on life-saving drugs and a number of other medicines has been kept at 8 per cent, Barkheda market chemists and druggists, in Babulal Gaur's constituency Govindpura, still impose 9.2 per cent VAT on medicines.

"We have no clarification on VAT," a druggist in Patel Dawa Bazar told Business Standard. In another interesting decision, after protest by traders Chief Minister Shivraj Singh Chauhan exempted sugar from VAT, though on the commercial tax department's list, it attracts 12 per cent VAT, while gur attracts 2 per cent VAT.

Tobacco and cloth have also been deleted from the VAT list. They belonged to the 8 per cent VAT slab.

The following goods attract 12 per cent VAT: cement and cement goods; cement pipes; all kinds of bricks; dyes; paints; etc.

A delegation of the Bhopal Sugar and Oil Traders Association met Chief Minister Shivraj Singh Chauhan and asked for clarification on VAT. Although protest is simmering, traders are confused about some decisions made against recommendations of the empowered committee on VAT.

For example, gur (jaggery) is in the 2 per cent VAT slab while all kirana items have been placed in the 4 per cent slab. "Gur is a kirana commodity," an office bearer of the association said on conditions of anonymity.

Similar is the case with grains, which have been placed in the 1 per cent slab. Here too, traders are confused since some items like sago or saboodana, groundnut, ghee, tea and coffee and similar commodities fall under the 8 per cent slab while kirana items have been covered under the 4 per cent slab.

Soybean processors have asked the Madhya Pradesh government to exempt the product from 4 per cent additional tax, to be levied under VAT, to protect migration of business to other states. "Our body, SOPA, has submitted a memorandum in this regard to the state government. Farmers will sell soya in states where there is no VAT," he said.

After the implementation of VAT, soya processors in Madhya Pradesh will have to pay 7.20 per cent tax, from the existing 4 per cent. A local auto dealer has pointed out some auto parts are on the VAT list. For example, spark plugs attract 8 per cent VAT, against the government's decision to cap the tax on auto components at 4 per cent. VAT came into force on Saturday. Officials were not available for comment.