VAT in MP still confuses customers

Value-added tax is taking its toll in Madhya Pradesh in absence of proper coordination among various departments and due to red-tapism the customers are forced to shell out more in the name of value-added tax (VAT). The confusion over VAT still prevails among state traders.

The department of commerce and industry rubbed salt on the customers wounds by increasing entry tax on number of commodities to compensate the losses due to cut in sales tax and introduction of VAT "� a clear violation of VAT theme that Central government will compensate the losses.

Recently the prices of a LPG Cylinder -- an essential household commodity, have gone up Rs 24. But the state government is creating a confusion among consumers that Oil Companies have increased the prices. But the fact is the state government has increased the entry tax from 1 percent to 9.5%.

Madhya Pradesh adopted VAT from April one without doing much homework. Although sales tax has been reduced on 114 household items, in absence of publicity, mall traders, sweetmeat sellers, and restaurants have started charging more from customers.

"There are about 114 goods covered under VAT on which tax rates have been reduced. The prices of these goods would not increase but decrease due to VAT as the tax burden on them has been reduced," a government statement issued last evening said and added, "Under the previous commercial tax regime the number of tax slabs were ranging between one percent and 23 percent. However in VAT system there are only three slabs.

The goods on which tax rate has been reduced from 13.8 percent to 12.5 percent include all type of packed fruit juices, cold drinks, watches, crockery items, leather goods (except sports material and footwear), musical instruments, timber, sanitary goods, cake, pastry and bakery products, ice-cream -Kulfi, carpet, Galicha, cement, cinematographic equipments, dye paints, electronic toys, laminated sheets, lubricants, marble and marble tiles, moulded furniture, plywood, preserved foodstuff, purses, ladies' handbags, suitcases, attaches, refrigerators, rubber products, scent-perfumes, hair tonics, crèmes, shampoo, silk fabric, telephone and its parts, toothpaste, tooth power, soap, typewriters, calculators, washing machine, vacuum cleaner etc.

Similarly, there are goods on which tax rate has come down from 9.2 percent to 4 percent. These include bricks, paper, medicines, tea, dairy products, printing ink, sewing machine, surgical equipments and transformers.

The goods on which the tax has been reduced from 4.6 percent to 4 percent are umbrella and its parts, candle stick, cattle feed, caustic soda, chemical fertilizers, cycle, tyre and tube and accessories of cycle, hearing aid, hosiery, hurricane lantern, kerosene lamp, glass chimney, peripherals of information technology, pesticides, Mawa(condensed milk), perforated pipe used for drip irrigation, plastic granules, matchbox, farm implements, tractor and trailer.

The goods on which the tax rate has come down from 1.15 percent to 1 percent include gold and silver ornaments, coins, precious stones like diamond etc. Besides, 53 goods are excluded from VAT. Important among them are foodgrain, pulses, Binaula Khali, de-oiled cake, Gur, fuel wood, charcoal, branded bread and handicrafts.

"We have no option but to put our product at high prices to pay taxes," a sweet seller told BS. But none of the state government officials has clarified as to what necessitated the state government to increase entry tax on some goods. principal secretary commercial tax Mr GP Singhal was not available for comment.