Buckling to pressure from alliance partner BJP, Punjab Deputy Chief Minister Sukhbir Singh Badal Tuesday ordered withdrawal of an amendment made in the Punjab VAT act which made it mandatory for traders and industrialists to remit VAT on the stocks as well.
Badal asked the state's excise and taxation department to draft an ordinance in this regard and present it for approval in the next meeting of the state cabinet.
The Punjab government had brought an amendment recently in the VAT (Value Added Tax) Act, 2005 to check evasion of input tax credit (ITC).
While the Bharatiya Janata Party (BJP) leadership in the state, which is part of the government, mounted pressure to withdraw the amendment, various traders' associations had met Badal, who is the excise and taxation minister, seeking its withdrawal.
Traders will now be required to file their returns as per the previous practice.
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"The fundamental idea to amend VAT act was to control the evasion of taxes that was skipping out of net due to bogus billings. The excise department has 249,421 registered traders out of which only 1,063 traders paid more than Rs.one crore tax per annum that becomes 85 percent of the total VAT collection of Punjab.
"During the last fiscal, 72,370 traders deposited tax less than Rs.1 lakh per annum and 144,758 registered dealers have not paid any tax to the state," a spokesman said here, justifying the move for the amendment.
Punjab BJP president Kamal Sharma welcomed the move of the state government in announcing the withdrawal of controversial amendment in the VAT Act.
Sharma said that the BJP and had strongly raised its resentment against the tax with the state government.
"Withdrawing this new amendment was a welcome decision and would provide relief for all the traders across the state. I thank the state government for making announcement in this regard and respecting the general sentiments of the traders that was against this tax," he said.
