Household goods prices up as confusion over VAT persists

Small traders in the state, particularly Kirana Vyaparis, are levying higher value-added tax rates by converting it into multipoint taxes, as a result of which prices of household commodities are spiralling.

The state commercial tax department has added fuel to the fire by increasing entry tax rates on certain commodities.

Tax on LPG, for example, has gone up by 24 per cent, to compensate for value-added tax losses, although the Centre has assured the state government that the VAT losses will be compensated.

"The Centre has not made any written assurance to the state that the losses due to VAT will be compensated," an official said.

Traders say they have to pay tax at each point. The tax has to be paid while goods are at the factory, with the distributor, dealer and retailer. A commodity priced at Rs 100 with VAT at 4 per cent is being sold at more than Rs 112 at the retailer, although the traders will get input rebate on the commodity. "There is confusion over the VAT and we will take action against it," the official said.

But the state government has no answer as to why it was necessary to increase entry tax on certain commodities despite the fact that the state kitty has swelled by Rs 677.66 crore through commercial tax and entry tax to close the financial year by posting an increase of 15.24 per cent. The commercial taxes department has fixed a target of Rs.5065 crore for the year.

Central sales tax collection , according to a commercial taxes department spokesperson, has gone up by 14.38 per cent to Rs 608.59 crore and entry tax by 22.52 per cent to Rs 573.69 crore. While collection from commercial tax touched Rs. 3941.48 crore, Rs. 6.59 crore was collected through central sales tax.

The Indore division clocked Rs 2099. 40 crore, Bhopal-Hoshangabad division Rs 1583 crore, Gwalior Rs 275.56 crore, Jabalpur Rs 240 crore, Khandwa Rs 85.69 crore, Ujjain Rs 191.39 crore, Ratlam Rs 86.19 crore, Chhindwara Rs. 102.22 crore, Satna Rs 358.89 crore and Sagar Rs 71.13 crore.