Maharashtra to lose Rs 2,000 crore in revenues due to VAT

Maharashtra is likely to incur a revenue loss of Rs 1,500-2,000 crore in the current fiscal due to implementation of value added tax (VAT), state sales tax commissioner BC Khatua said today.

Speaking on a seminar on VAT, Khatua said that though the centre had agreed to compensate the loss, the compensation would not cover losses incurred by the state due to modification of tax rates already prescribed by an official panel on VAT.

The empowered committee on VAT, comprising finance ministers of states, has stipulated tax rates for various commodities and the panel had clarified that it "will not compensate revenue loss arising due to tax rate modifications beyond the limit of the committee."

Khatua pointed out that Maharashtra had modified VAT beyond the rates prescribed by the committee and hence would have to bear certain amount of revenue loss.

"Confusion on procedural issues on VAT is still there in industry circles and government departments. We will be addressing those issues by updating the website on VAT and posting new circulars and notifications," Khatua said.

But the sales tax commissionerate, he said, would soon come out with necessary clarifications, besides "aligning" classification of excise tariff.

Sales tax department plans a makeover

In its bid to facilitate easy implementation of value-added tax (VAT) in the state, "The sales tax department is undergoing a transformation and a new system is slowly evolving to address the bottlenecks on implementation of VAT," sales tax commissioner BC Khatua today.

The overhaul is expected to be completed in three to four months, with management consultant firm Price Waterhouse Coopers Pvt Ltd assisting the state to induct international best practices in implementing VAT.

The department is touted to be a single point location for VAT and there would be 'no dealer jurisdiction.' Besides, the penalty for tax evaders will be 100 per cent and there will be no scope for bargaining in fixing this penalty level.