VAT collections up around 20% in northern states

The northern states are likely to see 15-20 per cent increase in the value added tax (VAT) collections in 2007-08.

Rajasthan, Uttarakhand, Himachal and Haryana have registered around 20 per cent growth in revenue till October this fiscal while in Delhi the revenue grew by around 14 per cent.

But, Punjab is lagging behind among all the VAT implementing northern states, with an increase of seven per cent. However, the state government is confident of achieving 15 per cent increase in tax collection this fiscal.

Haryana has registered about 18 per cent growth in the VAT collections till October this fiscal where as the total overall revenue growth in the state is 13 per cent.

Delhi, whose 75 per cent tax revenue comes from VAT, expects about Rs 8,500 crore collection in the current fiscal.

"VAT is a major source of revenue for Delhi. In fact, due to better collections Delhi pre-paid Rs 750 crore loan to the central government this year," said a senior finance ministry official of the state.

Uttarakhand is witnessing a healthy growth of 20-25 per cent in the VAT revenue, which contributes 57 per cent of the total tax revenue of the state.

By the end of October this year, the VAT revenue stood at Rs 889.12 crore, whereas it was Rs 738.76 crore during the same period last year, registering a growth of 20.53 percent. The oil sector remains the major contributor to the growth of VAT in the state.

This year, the government has set a target of Rs 1,600 crore for collecting the VAT revenue. From 2000, when the state was formed, to the year 2007, the seven year journey has seen a tremendous rise in trade tax which has now taken the shape of VAT.

Before Uttarakhand was formed, the trade tax in this part of the region was only Rs 161 crore. But in 2006-07, VAT rose to Rs 1,361 crore, top officials of the state finance department said.

In Rajasthan, the switch over to the VAT regime helped the state in increasing tax revenue. "In 2006-07, the income from sales tax is expected to rise by 20 per cent," said Rajasthan Chief Minister Vasundhara Raje.

To encourage people to take a cash memo while purchasing products, Rajasthan has a new 'VAT Dhanlaxmi scheme' under which a customer is being be offered a lottery ticket on purchases of Rs 100 or more.

In Himachal, the imposition of VAT has had a phenomenal effect in tax collection in the state ever since it was imposed around three years ago. Sources in the state government say while the tax collection was around Rs 600 crore prior to imposition of VAT, tax collection post VAT has now shot up to Rs 1,800 crore.

Punjab expects 15 per cent growth in VAT collection. Saying that there was about seven per cent current growth in the VAT collection, Punjab finance minister Manpreet Badal said the growth would be at least 15 per cent by March, 2008.

Uttar Pradesh is the only state in the country, which has not joined the VAT system. It is likely to implement VAT from January, 2008. All the VAT implementing states saw 20 per cent revenue growth in 2006-07.

With inputs from Bhopal, Shimla, Jammu, Jaipur, Chandigarh, Dehradun