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UP is to be governed by
the new Value Added Tax (VAT) from January 1, 2008.
Lucknow, December 30, 2007: Trade and industry in Uttar Pradesh is to be governed by
the new Value Added Tax (VAT) from January 1, 2008. With UP coming on
VAT, the implementation of VAT by all states is widely seen as first step towards the
GST from 2010. Now all states and Union Territories have joined the new tax regime. The UP is the last.
The most-important recommendation of the Kelkar task force report, on which the
move was based, was a countrywide tax on goods and services (GST) based on the
principle of VAT.
The Centre has already set up an empowered committee comprising finance
ministers of states to draw the roadmap for the GST. The committee is likely to
submit its final report to the Union finance ministry next month. As per its
recommendations, 2010 onwards, the states will get the power to levy and collect
dual GST on certain services including amusement parks, private health and
education services. The Centre will levy and collect GST on all India services
like banking, insurance and telecom.
The UP trade tax department officials, however, are not expecting a breakthrough
so far as India emerging as single national market is concerned. A senior official of the
Department said, "the implementation of VAT, has not eliminated the anomalies in tax structure on single items in
various states and smuggling of goods in the southern states, because of
variation in tax rates still continues”. He said the biggest problem is that the “states involved in the implementation
of VAT see it as a paper-based system, but a VAT which is not run through an IT
system will be suffused with corruption, and will increase paperwork for both
taxpayers and collectors”.
Border check posts will be required which will cause delays that more than undo
the progress made by the construction of highways. The goal of India as a single
national market will not be achieved as VAT credits will not flow across states.
The trade tax department however claims that necessary IT infrastructure across
the state is ready for the VAT. From January 1, 2008 the department will be known as Commercial tax department.
Workshop on VAT
HUBLI, December 26 2007: The purpose of asking small traders with transaction of not more than Rs 25 lakh, to undergo audit under the new norms of Value Added Tax (VAT) is not clear, said Bangalore-based chartered
accountant Sanjay Dhariwal. Speaking at the workshop on VAT, jointly organised by the Karnatak Chamber of Commerce and Industry and Hubli branch of the Institute of Chartered Accountants of India, at KCCI Auditorium recently, Dhariwal analysed Form- 240, meant for submitting audit report under provision of VAT-2005 and explained various columns of the forms.
While explaining the disadvantages of the audit to the traders, the CA questioned the objective of the Government in devising such an exhaustive form and eliciting information. “Audit is a certificate confirming that a trader has complied with all the statutory requirements. Once such an audit is made mandatory, department officials should
not raid the traders till the audit is completed and Form-2004 is filed,” he stated. Dhariwal found Form-240 under the provisions of VAT- 2005 very exhaustive. Even CAs and tax practitioners are not prepared to comply with it before December 31, which is the last day for filing the same. He appealed to the chambers to make a strong
representation to the Government to extend the last date to March 31, 2008. Under the pretext of VAT, Central Sales Tax (CST) information is also brought under audit, he pointed out.
Source: Express News Service
Consumer durables to grow 12% in 2007-08
NEW DELHI, December 24, 2007: The consumer durables sector in India is expected to achieve a growth of 12 per cent in 2007-08, surpassing the 11.5 per cent it posted a year ago. The Ficci (Federation of Indian Chambers of Commerce and Industry) survey on growth projections for the Consumer Durable Goods Sector for 2007-08 said this rise was despite the constraints of an inverted customs duty structure and high levels of excise duties on the main growth drivers of white goods and consumer electronics industry.According to the report, the growth can further accelerate if the government evolves a uniform tariff and tax structure for all electronic hardware.
While television sets attract an excise duty of 16 per cent, personal computers are taxed at 12 per cent. Similarly, TV sets attract a 12.5 per cent value added tax (VAT) rate, while it is just 4 per cent for PCs. Based on feedback and interaction with representatives of consumer durables industry, allied industry organizations, associations,
government agencies and public sector undertakings, Ficci revealed that the consumer durable sector was poised for a quantum leap due to technological improvements, falling prices due to competition, aggressive and innovative marketing and declining import tariffs.
Consumer electronic manufacturers are of the opinion that in the era of digital convergence, differential taxation policies for IT and consumer electronics products create distortions and anomalous situations. There is the need for reducing the excise duty on hardware to 8 per cent for helping the domestic industry. At present, the customs duty on colour television and colour picture tubes, on import from Thailand is 10 per cent. This has come down to 6.25 per cent from September 2006 and zero per cent in year 2007. On the contrary, many inputs for indigenous
production of these items attract the peak rate customs duty of 10 per cent. This anomalous situation would discourage entrepreneurs to manufacture and invest in India. The industry is in favour of granting 40 per cent
abatement on MRP-based excise duty on CTVs and air conditioners from 35 per cent and 30 per cent respectively.
Source: Indiantelevision
Maharashtra to end tax on film rights transfer
Mumbai, December 19,
2007: The Maharashtra government will soon scrap the value-added tax (VAT) applicable when Bollywood producers temporarily transfer copyrights of their films. Chief Minister Vilasrao Deshmukh assured film producers to relieve them of the additional tax burden when a delegation of Indian Motion Picture Producers Association
(IMPPA) met him last Friday in Mumbai. Maharashtra is the only state in India which imposes VAT on this.
With the advent of electronic technologies, producers now possess about a hundred different copyrights on their films. This has provided them new earning avenues. They are no longer solely dependent on theatre releases to earn from their productions.
Govt grants Rs 10 cr to develop cold chain infrastructure
NEW DELHI, December 17, 2007: The Government will extend a grant of Rs 10 crore for
cold chain integration in the country along with subsidies to encourage private
players to invest in the cold chain infrastructure. This was announced by
minister of state for food processing industries Subodh Kant Sahai at the
inaugural session of the two-day conference on supply chain and technology in
retail organised by FICCI.
Speaking on the need to create a modern chain for preservation and value
addition of perishables, he said, “During the Eleventh Plan, the ministry is
launching a revamped cold chain infrastructure scheme to create integrated cold
chain infrastructure at different levels - farm-level primary processing
centre-cum-cold chain, collection/aggregation centres and strategic distribution
centres.” He said his ministry is trying to negotiate with state governments to
reduce VAT to between zero and four per cent.
Source: ENS ECONOMIC
BUREAU
FICCC wants a uniform VAT should be introduced in all states.
New Delhi, November 26, 2007: Industry body FICCI on Sunday sought liberalisation of foreign direct investment
(FDI) regime in retail along with industry status for the sector, which is
expected to reach $430 billion mark by 2010. The Indian retailing industry is projected to attain a turnover of $430 billion
by 2010 from the current $ 328 billion , a FICCI report on 'Organised Retail:
Unfinished Agenda and the Challenges Ahead' said. Organised retail, which accounts for only four per cent of the total market, is
set to grow at 20-22 per cent and reach $ 90 billion mark by 2010, it added.
Currently, FDI up to 51 per cent is allowed in single brand retailing whereas
multi-brand retailing is not open to foreign participation. Foreign retail giants like Wal-Mart, Carrefour and Tesco are looking to enter
the sector in India.
While releasing the report, FICCI Secretary General Amit Mitra said there should
be one common market in the country and uniform VAT should be introduced in all
states.
Asking for industry status for the sector, the chamber said goods and service
tax (GST) should not exceed 20 per cent and excise duty should be cut to 14 per
cent from 16 per cent at present. FICCI also sought 100 per cent tax break for at least 10 years in case of cold
chain infrastructure.
Most
Indian states have nearly doubled tax collection after implementation
of VAT
Kolkata, November 23,
2007: Speaking at a seminar organised by the Institute of Chartered
Accountants of India (ICAI) here on Friday West Bengal Finance
Minister Mr. Asim Dasgupta said since the introduction of VAT in
April 1, 2005, states have progressively seen an improvement in their
tax collection. "The states are seeing nearly 24-30% growth in
their tax revenue collection, he said.
The empowered committee also proposes to tone up
the VAT system to minimize revenue leakage system.
WB
State exporters cry foul over lack of VAT refunds
Kolkata, November 20,
2007: State exporters who, like their peers all over the country, are struggling
to cope with the rupee appreciation, find themselves in far more dire
strains for not getting on VAT payments ever since the tax was
introduced in the state in 2005-06.
Based on state export turnovers, exporters estimates that
annually Rs. 225-230 crore have been paid by engineering goods exports
to the state government on the account of VAT. Rs. 80 crore on leather
goods, Rs. 16-18 crore on handicraft and about Rs. 100 crore by
others. Against this, none of the exporters in the state has got back
a single rupee as VAT refund.
Officials of the Engineering Export Promotion Council (EEPC),
Indian Leather Products Association (ILPA), Export Promotion Council
of Handicrfts and FIEO claim all exporters in their field are
regularly depositing tax on a quarterly basis since the first quarter
of 2005-06. Officials of EEPC, ILPA and FIEO said when ever they had
asked the finance department and the directorate of commercial taxes
to release at least 50% of the outstanding refund on ad-hoc basis, but
nothing has happened yet, though revenu collection from VAT in the
state is growing 17-18% a year since its introduction in
2005-06.
While West Bengal remains noncommittal about the schedule
for VAT refund, many other states are already on the job. According to
EEPC, while exporters based in Delhi get a VAT refund every month,
their peers in Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh,
Haryana and Punjab are receiving the reimbursement every quarter.
Source: The Economic Times
Plea to cut VAT on cashew kernels
Kochi, November 11, 2007: The Cashew Export Promotion Council has appealed to the authorities of all States to reduce Value Added Tax (VAT) on cashew kernels to four per cent. The council pointed out that raw cashew nuts are included among items attracting four per cent VAT and cashew kernels among those attracting 12.5 per cent in most States. As the higher rate of tax would adversely affect consumption of cashew kernels, the Council
represented to the Empowered Committee of State Finance Ministers and various State Governments to put cashew kernels among the items attracting four per cent tax.
The council has, in addition, represented for abolition of the four per cent CST on cashew kernels. The council expressed happiness at the fact that the Government of India has reduced the Central Sales Tax for inter-State sales from four to three per cent from April 1 2007, which helps the exporters. In response to the council’s request, the Government of Kerala has also reduced VAT on cashew kernels to four per cent.
Ensure VAT helps consumers, traders
PUDUCHERRY, November 6, 2007: Members belonging to the Treasury Benches and the Opposition in the
Puducherry Assembly on Monday stressed the need for implementing the Value Added Tax (VAT) in such a way to provide relief to both the consumers and the traders. Initiating the debate on the Puducherry Value Added Tax Bill, 2007, Member of the Communist Party of India R. Viswanathan said the Government should have elicited the views of the parties, traders, industrialists and consumers before switching over to the new tax regime.
He asked the Government to ensure that it could exercise powers to effect amendments to the PUDUVAT Act, 2007 as and when it became necessary. He also pleaded for setting up an effective appellate authority by filling
the vacancies. Dubbing the Bill a bundle of contradictions, he said while it spoke of replacing the erstwhile Sales Tax, the relevant G.O.s were allowed to continue.
Participating in the debate, leader of the Opposition A.M.H. Nazeem pleaded for more concessions to the traders and industries. Leader of the Puducherry Munnetra Congress K. Lakshminarayanan cautioned against any increase in the tax burden of the people, owing to the implementation of VAT.
Retaining Central Sales Tax along with VAT would adversely affect the investments in the Union Territory. He also favoured Income Tax exemption for industries with a view to attracting new investments.
Pattali Makkal Katchi leader P.K.R. Anantharaman asked the Government to provide tax exemption for vegetable oil. Leader of the AIADMK A. Anbalagan
(AIADMK) said just as some small States including Uttarakhand, Jharkhand and Himachal Pradesh had been given concessions, the UT also strive to get more concessions. A. Namassivayam (Congress) pleaded for exemption from VAT for articles used by farmers. S.P. Sivakumar (DMK), N. Kalainathan (CPI) and N. Anand
(PMC) took part in the debate.
Source: The Hindu
India may help 25 nations in VAT implementation
NEW DELHI, November 2, 2007 : India may offer a tip or two to 25 other countries on harmonisation of value-added tax (VAT) in a federal set-up during the upcoming international conference on federalism beginning here on Monday.
The conference — being organised by the Inter-State Council with the cooperation of Forum of Federations, the international body committed to facilitating an exchange of ideas and views on federalism — will also comprise a session on federal policing that will focus on the topical issues of federal crimes and the need for an independent federal law enforcement agency, secretary to the Inter-State Council Amitabh Pande told reporters on Thursday.
On VAT, Mr Pande elaborated, several federal countries had evinced interest in knowing how India could get so many of its states to implement a harmonised VAT structure. The Indian tax officials are likely to share their
experiences in this regard. The conference, to be held between November 5 and 7, will be attended by heads of government of four countries, Lok Sabha speaker Somnath Chatterjee, Union home minister Shivraj Patil and Leader of the Opposition L K Advani, besides academicians, administrators, fiscal experts, provincial heads and local
body / panchayat leaders. Though the working title of the conference is “Unity in Diversity: Learning from Each Other,”
the delegates will discuss four key themes: building on and accommodating diversities, emerging issues in fiscal federalism, interaction in a federal system and local government and federal systems.
Source: Economic Times
Silver
price prices rises to Rs 19,200 a kg in Mumbai (excluding 1 per cent VAT).
Mumbai, October 29, 2007: Silver prices
increased up to 5.20 per cent last week on strong global cues and firm support from gold and the energy sector. The dollar’s weakness against all major currencies has also helped metals zoom globally. In spot market on Monday, silver was quoted at Rs 19,200 a kg in Mumbai (excluding 1 per cent VAT).
The
Union cabinet approved refund of value added tax (VAT)
New Delhi, October 25, 2007 : The Union cabinet approved refund of value added tax (VAT) it had collected from
industries in two union territories -- Daman and Diu, and Dadar and Nagar
Haveli, which enjoy tax holiday.
Uttar Pradesh finally joining the value added
tax regime
October 24, 2007:
The BSP government in Uttar Pradesh took an in-principle decision to switch to VAT. The state realised it was
missing out on an annual 20 per cent rise in tax receipts recorded by other
states, plus a gradual loss of business by India’s most populous state to
others. State cabinet secretary, Shashank Shekhar Singh, said due to absence of
VAT credit, traders and manufacturers in UP were being denied input tax credit.
As a result, goods produced in UP were becoming uncompetitive in other states.
The state has therefore followed Tamil Nadu to complete the Indian experiment
for a nation-wide state-level VAT regime.
With Uttar Pradesh finally joining the value added tax regime,
all goods manufactured and sold in the same state, anywhere in India, will pay a tax only on the value
addition. All goods, which attract a central excise duty, too get a VAT refund.
The only segment where VAT is not applicable is central sales tax levied for
inter-state movement of goods. This is the reason why the current VAT format is
called a state-level VAT, and not a national-level VAT.
First auto components park
in West Bengal
Kolkata, October, 17, 2007: West Bengal will set up its first auto components manufacturing park spread over 500 acres near Guptamoni in West Midnapore district. The state's commerce and industry minister Nirupam Sen said
the government was in talks with the developer, the Bengal Shristi Group, to
finalize the details of the project. Bengal Shrishti is in talks with some German companies that are interested in setting up manufacturing units in the park, which is likely to get SEZ
status. The developer will go in for direct purchase of land for the project, Sen told the media in Kolkata on Tuesday 16 October.
A 16-member German delegation comprising members of the German engineering federation Verband Deutscher Maschinen und Anlagenbau (VDMA) was in Kolkata on Tuesday to explore business opportunities. VDMA
comprises 3,000 manufacturing companies. The delegation represented various sectors like machine tools,
chemical industry, software and other industries. Sen pointed out that his government provided incentives, including concessions in fixed capital investment and VAT. There could even be further incentives on a case-to-case basis, he said.
VATs, the proposed FairTax (Bill H.R. 25)
in USA
15 October,2007: Better is an end tax, at retail, combined with direct rebates to untax spending to poverty level. Far less complicated than VATs, the proposed FairTax (Bill H.R. 25) is such a plan gaining adherents in the United
States. Dan Mastromarco, longtime proponent of tax simplification, recently addressed misperceptions of the
FairTax ( http://snipr.com/mastroflatvsfair ) and discussed some of the downside of VATs while responding
to misinformation propagated by a former Reagan economic advisor.
A.K.
Walia assures traders that during festive season there will be no tax
raids
New Delhi, October 12, 2007: State finance and planning minister A K Walia has assured traders that the
enforcement staff of trade and tax department would not raid commercial establishments during the festive season. He assured this to a delegation of traders and industrial organisations today.
China’s new rules may hit imports of metals
MUMBAI, October 11, 2007: China’s ministry of finance announced new measures to limit export of processed goods, discourage investment in low-value-added products and ease the trade surplus. This announcement is expected to have a significant effect on Chinese metal imports. It will try to limit exports on more processed goods in the second half of 2007.
Over 1,800 types of commodities, including copper, lead, zinc and cloth, are added to the category. Importers will have to deposit half of their payable levies (including import duty and VAT) at the customs when they import raw materials.
Punjab PET firms moving to Himachal
New Delhi/ Chandigarh October 05, 2007: The PET (polyethylene terephthalate, in fibre form known as polyester) bottle manufacturers
shifting their base from Punjab, because of the
wide differences in the tax structure. Besides, the high density of pharmaceutical units in Himachal Pradesh is also attracting the PET bottle manufacturers. Four companies have migrated to the hill state and more are expected to join the bandwagon in the near future.
Currently, the state has about 22-25 PET bottle manufacturers, majority of them being in the small sector, having a turnover of Rs 25 lakh per day. The PET bottle manufacturers are located in Ludhiana, Mohali,
Amritsar, Moga etc. Compared to Himachal Pradesh, where PET manufacturers avail tax
benefits and enjoying tax holiday, Punjab PET manufacturers have to shell out 16 per cent excise duty in addition to the 4 per cent VAT.
Source: Business Standard
Exporters allege delay in tax refund
NEW DELHI, October. 2, 2007: Exporters allege to be inordinate delay in refund of a plethora of duties and levies like service tax and VAT to name a few. Delays of up to six months is very common for the various duties and taxes on which exporters can claim a refund, exporters say wondering why government cannot take the exemption route rather than the refund route. In other words, “Why charge in the first place and then force us to claim refund?” Federation of Indian Export Organisations (FIEO) president, Mr GK Gupta, asked. This, he pointed out, only added to the
transaction cost and entailed a lot of paper works which could be avoided.
Under the present export policy, even export-oriented manufacturing units have to pay various duties and taxes while importing raw material or primary goods. In addition, state taxes and VAT (value added taxes) as well as service taxes are levied. These taxes are reimbursable in the event finished goods are exported or the imported material is re-exported after value addition.
Stating that there was often a delay of over six months for refund, Export Promotion Council for EOUs and SEZ Units (EPCES) director general, Mr Lalit B Singhal, said the argument often given is lack of funds. Banks that make these refunds are able to do so only after getting refinance from the Reserve Bank of India (RBI). Moreover, Export Import (EXIM) banks are not covered for getting refinance. “Why not exempt them, say the central sales tax, for instance?” Mr Singhal asked.
Supporting this stand, CAPEXIL (Chemicals and Allied Products Export Promotion Council) chairman, Mr Samir Kumar Ghosh, stated that the delay in refunds added to the woes of the exporters battling an appreciating rupee.
Source: The Statesman
India's food and beverages
industry is likely to touch Rs 4,660 billion
NEW DELHI, September. 30: India's food and beverages industry is likely to touch Rs 4,660 billion (about $110 billion) with a growth rate of nine percent by March 2008, according to a survey by the Federation of Indian Chambers of Commerce and Industry
(Ficci). The segments that have indicated a high growth potential of 10-20 percent in the survey are branded flour, bakery items, biscuits, fruit juices, sauces, chocolates, beer, butter, country liquor, branded milk products and malted food among others. According to Ficci, the main reasons for the
exponential growth are positive developments based on the government's liberal policy measures, socio-economic factors
and the recent government initiatives aimed at raising farmers' income.
The chamber has sought income tax exemption on the grading of agriculture and farm produce, cold storage,
processing of fruit and vegetables from April 2007 till March 2012. Besides, the F&B industry has also urged a
10- year tax holiday for food parks and integrated food zones. It has also asked for a uniform tax structure that is imperative for a sustained growth of the industry. However, it has lauded the introduction of the value added tax
(VAT), which in this sector ranges between 4 and 12.5 percent. The F&B industry leaders have also insisted on doing away with the customs duty and countervailing duty on import of food processing machinery by mega food processing plants besides lowering the excise on all machinery used for the processed food industry to a maximum of eight percent. The industry has requested that export oriented units (EOUs) should be permitted to sell products in the domestic tariff area free of excise duty.
Source: The Statesman
Chemist's association seeks tax abolition
PANAJI, September 29, 2007:
The All India Organisation of Chemists and Druggists (AIOCD) has demanded
abolition of taxes on essential medicines so that they are available at cheaper rate to the consumers. "Essential medicines like anti-Malaria, anti-TB, anti-Cancer, anti-HIV,
anti-Diabetes should be exempted from Value Added Tax (VAT) and other taxes," All India Organization of Chemists and Druggists (AIOCD) president A N Mohan told
reporters yesterday on the sidelines of AIOCD's fifth executive committee meeting here. He said the medicines will be cheaper by almost 30 per cent if taxes are abolished.
"Rates for certain medicines like anti-cancer are fixed abnormally
high which makes them unaffordable to certain section," Mohan said. The executive committee meeting also demanded that union
government impose uniform tax on medicines. The association has demanded that their resolutions be considered by the government while framing
"pharmacy policy".
Source: The Economic Times
Cheap Chinese imports worry tyre makers
New Delhi September 24, 2007, With the tyre market being flooded with cheaper Chinese bus and truck tyres, the domestic tyre industry is up in arms about the under-invoicing of these imports and their inferior quality. Currently, Chinese-made bias tyres (non-radial
tyres) are available at Rs 8,500-9,500 a tyre while Indian bias truck and bus tyres range between Rs 10,500 and 12,000. The replacement tyre market is currently pegged at 6.5 lakh units a month. Out of these Chinese bias tyres account for 70,000-75,000 and are growing rapidly.
Questioning the low-price of these imported tyres, an industry expert said, “With global prices of raw materials such as natural rubber being in tandem with the Indian prices, and raw material amounting to 60 per cent of the cost of the tyre, such a difference is not possible except in the case of these tyres being of
inferior quality or under- invoiced.” Although the government levies an anti-dumping duty of $ 135 a tyre on the Chinese imports, it has not been able to address the issue of under-invoicing and inferior quality
tyres.
According to an industry source, the average invoiced price of a Chinese imported tyre is in the range of $ 85-105
(Rs 3,500-Rs 4,020). “With such a low price to start with, they keep paying lesser taxes at all levels including customs. Moreover, the sales of these tyres are hardly ever recorded and so, the retailer evades the Value Added Tax (VAT) of 12.5 per cent.”
Source: Business Standard
E-filing of VAT returns on cards
PUNE, September 24, 2007: The sales tax, Pune division, will introduce the facility for online filing of VAT returns in two months,
D.V. Bhalchandra, additional commissioner, sales tax (Pune), told TOI. Starting
with the larger contributors of VAT, the e-filing facility would be introduced in a phased manner and would eventually benefit 60,000 VAT dealers in the city, he added. The move forms part of the restructuring exercise undertaken by the sales tax department post-introduction of VAT on April 1, 2005.
Next to Mumbai, Pune is the largest contributor of VAT to the state coffers. While Mumbai’s annual contribution is in the range of Rs 11,000 to Rs 12,000 crore, Pune contributes over Rs 3,500
crore. In financial year 2006-07, VAT constituted 95 per cent of the department’s Rs 3,780 crore total revenue from
Pune. According to Bhalchandra, the e-filing facility would be initially extended to 10,000 VAT dealers having an annual turnover in excess of Rs 40 lakh each. This includes the 350 large tax payers (LTPs), ie, dealers paying VAT in excess of Rs 50 lakh each year. Majority of these LTPs are manufacturers, importers, exporters and liquor dealers, he said. “Later, the facility would be extended to the remaining 50,000 dealers in the division,” he added.
Source: Times of India
Cheaper ticket for movie-buffs
New Delhi, September. 18,
2007 (PTI): If the Information and Broadcasting minister succeeds in persuading states to reduce entertainment tax on
films, than movie-buffs can hope to enjoy their visit to cinema halls
. Minister of Information and Broadcasting P R Dasmunsi, who will be meeting the information ministers from all states tomorrow here, will try to convince that entertainment tax on the films should be minimised for an
unstinted growth in Indian cinema, the ministry sources said.
Depending on the location of theatre in the states, the movie-goers pay anywhere between 40 to 100 per cent tax on a ticket -- making India a "highest entertainment taxed" country in the world. This is in contrast with other
industries where excise duty is capped at 16 per cent and service tax at 15 per cent. As entertainment tax is the state subject under the Constitution, every state has its own tax
regime, which has been subject to the whims of each state government.
Besides a hefty entertainment tax, which nearly doubles the cost of the ticket, the film industry also coughs up 12.5 sales tax or VAT (value added tax) on the eatable and drinks sold in the intermission, 12.36 service tax on the advertising revenues, 12.5 VAT on the distributor payouts, 12.36 service tax on the property rentals. In addition, there is a plethora of other minor taxes such as show tax,
INR, property tax, advertising tax, etc. And if there is any
profit left after all this, a 35 per cent income tax on that.
Tax burden on Indian cars more than double of China
New Delhi,
September, 18, 2007 (PTI): When purchasing cars, Indians fork out nearly double the amount of duties and taxes that Chinese citizens pay over and above the actual vehicle cost. In India, the overall tax structure inflates the on-road price of passenger cars by nearly 50 per cent, while the same in China is only 23-28 per cent, according to a new research note published by global financial services major
Citigroup. The Chinese structure comprises of a consumption tax, ranging from 3-20 per cent depending on engine
displacement, and around 17 per cent VAT.
The tax structure while purchasing passenger cars in India consist of excise duty, other central government
duties, sales tax, other local taxes, insurance and road tax - which need to be paid over and above the ex-factory price. On the other hand, China follows a two-level duty structure -- a consumption tax and a Value Added Tax (VAT), according to
Citigroup.
Delhi High Court upholding 4% Value Added Tax (VAT) on
IT products
Mumbai, September 16, 2007:
Delhi-based trade body, Computer Media Dealers' Association (CMDA), heaving a sigh of relief on Delhi High Court upholding 4% Value Added Tax (VAT) on select IT products.
New tax model being formulated
Kolkata, September
6, 2007: STATE Minister for Finance Asim Dasgupta said the taxation model of the proposed Goods and Services Tax (GST) is being formulated. GST is the modified taxation model that will succeed the existing Value Added Tax (VAT). Recently, Dasgupta was on a 10-day visit to Brazil and UK for studying the tax structure in the two countries. “The introduction of GST is scheduled to take place on April 1, 2010. We are formulating the GST in our own way,” said Dasgupta, also the chairman of the empowered group of finance ministers.
The minister had led a delegation to the two countries and interacted with political and bureaucratic officials. “After the Union government took the decision to introduce GST, we decided to take a look at the tax structures in other countries. The introduction of VAT enabled setting off tax on inputs used for production of goods. By integrating Service Tax and VAT, GST will be introduced,” Dasgupta said.
The delegation, that had finance ministers from twelve states, toured Sao Paulo, Rio de Janeiro in Brazil and the UK. “After 110 meetings (since 1999) over this period, we have achieved many things. In India, tax reforms have been on for quite some time. Prior to VAT, there were numerous tax rates,” Dasgupta said. Now with the GST coming in, the government intends to streamline the differences even more.
Source: The Financial Express
State ministers indicate tax reforms by 2010
LONDON,
September 5, 2007 : Finance ministers of a dozen Indian states say their study of other countries' tax harmonization systems validates India's ongoing plans for tax reform, to be completed in 2010. Dr Asim Dasgupta, chair of the Empowered Committee of Finance Ministers of all Indian states and Union Territories, told TOI the group's six-day visit to Brazil and the UK to study the implementation of a single Goods and Services Tax (GST) across India, "has been a confirmation of what we were thinking".
The ministerial Committee's apparent self-satisfaction with plans for a GST on April 1, 2010, stand in stark contrast to the recent warning issued by FICCI that a single tax system may not be appropriate for India. Last week, FICCI said a unified tax to be administered by the Centre, with the states sharing the revenue, was a distant dream but the states may not like to forgo their constitutional taxing powers.
Dasgupta, who also wears the hat of West Bengal's finance minister, said the Committee's discussions with
British tax officials and ministers underlined the genuine worth of Indian tax reforms. "Indian tax rates are very low compared to many countries in the European Union," he said, pointing out that the UK's current Value-Added Tax (VAT) was set at 17.5 per cent and Germany's was 25 per cent.
"We are in the midst of tax reform and we've gone a long way," Dasgupta said, adding that "much of what we have heard and seen in Brazil and India indicates we are on the right path". The Committee's travels, half-way round the world, were prompted by the urge to study federal Brazil's experiments with VAT. Brazil was the first country to
introduce VAT in the 1960s. The UK is currently trying to integrate its VAT system with the EU. Dasgupta said the UK's struggles to harmonise tax systems within the EU "are genuine" and worth noting.
Dr A.K.Walia, finance minister of the National Capital Territory
(NCT), said the Committee's discussions in Sao
Paolo, Rio de Janeiro and Brasilia on how best to introduce a single tax were very useful. But in a reiteration of Committee chairman Dasgupta's views, he insisted, "our discussions showed that the system we've adopted is already quite good".
Source: The Times of India
VAT scheme lacks uniformity: Chief Justice
CHENNAI,
August 26, 2007: The Chief Justice of the Madras High Court, A. P. Shah, said that Value Added Tax (VAT) scheme in India lacked uniformity and did not conform to earlier consensus of the States as per the White Paper. Inaugurating the two-day ‘All India workshop on Indirect Taxes’ organised by the Madras Chamber of
Commerce and Industry (MCCI) here on Friday. Mr. Shah pointed out that the tendency of States to defy the agreed VAT rates in schemes and procedures was a threat to the avowed object of VAT scheme. According to him, the impact of VAT was not yet felt by the users due to various reasons. In terms of procedure and documentation, there was lack of uniformity.
Repeated amendments and modifications was a matter of serious concern. Mr. Shah said he was not able to find out whether the prices have come down or the trade volume had risen after the implementation of VAT scheme. He asked the trade bodies to help the industry by coming out with a
survey. P. Purushotham, Joint General Manager (Indirect Taxes) L&T – ECC division and Chairman, Expert Committee on VAT, said there was no uniformity among
States in schemes and procedures. “With regard to filing of returns, some States were asking for unwanted information. It ranged from two pages to 18 pages and different words were used by different States to define a
single product. One way or other, there has to be uniformity and industry is looking for uniformity. Maharashtra has been business-friendly, while Tamil Nadu a late entrant to introduce VAT is far behind in this aspect,” he lamented.
Source: The Hindu
Parliament can levy service tax on CAs, architects: SC
NEW DELHI ,
August 23, 2007: The Supreme Court has held that Parliament is competent to levy service tax on chartered accountants, cost accountants and architects. "We hold that Parliament has legislative competence to levy service tax by way of impugned Finance Acts of 1994 and 1998 under Entry 97 of List I on chartered
accountants, cost accountants and architects," a bench headed by Justice S H Kapadia said while dismissing an appeal filed by All India Federation of Tax Practitioners.
The apex court said service tax was a value-added tax (VAT), which in turn was both a general tax as well as a
destination-based consumption tax levied on services provided within the country. "Service tax is VAT. Just as
excise duty is a tax on value addition on goods, service tax is on value addition by rendition of services," the bench stated.
The court classified services under two categories - property-based services and performance-based services. It said the first category would cover service providers such as architects, interior designers, real estate agents and construction services. The second category would cover stock brokers, chartered accountants, cost accountants, security agencies, tour operators, event managers and travel agents among others.
Source: Economic Times
India needs to cut corporate tax to match Asian rivals
NEW DELHI : India's corporate tax rate is higher than its Asian
neighbors and it needs to cut the rate to attract more foreign direct investment (FDI), an annual global
survey by tax consulting firm KPMG said on Wednesday. The survey also shows that corporate tax rates in some Asian economies like
HongKong, Singapore, Malaysia are significantly lower than those in India.
Further, significant reductions are expected in the UK, Germany, Spain,
Singapore and China, it said. "Therefore, we believe India should post-haste implement the Kelkar Committee
recommendations of reduction of corporate rates to 30 per cent. This is
particularly so as various exemptions under domestic tax laws are being
progressively phased out," KPMG said in a statement.
Commenting on the survey findings Sudhir Kapadia, National Head Tax & Regulatory
Services, KPMG India said, "Lower corporate tax rates can provide stiff
competition to India for attracting Foreign Direct Investment". The Survey also highlights increasing importance of indirect taxes as a revenue
gathering strategy in many countries. "In fact many countries are either
rationalising or increasing indirect taxes," said Harishanker, KPMG's national
head for indirect taxes, which include excise, customs duties and service taxes.
"Our India experience equally underlines the growing importance of indirect
taxes with the introduction of VAT (value added tax) and the stated implementation of GST (goods and services tax) by April 2010. Therefore it is
imperative we focus on the implementation of GST by 2010 and rationalise
indirect taxes, to avoid multiplicity of taxes, ensure revenues/ compliance and
provide a better and sound tax administration," the statement said. This year’s survey compares corporate income tax rates as at January 1, 2007
with the same date in earlier years, dating back to 1993.
Source: Hindustan Times
Trial run of Rs 100-cr MRO facility at GHIAL
Hyderabad, Agust 16,
2007: The third party maintenance, repair & overhaul (MRO) facility coming up at the
proposed GMR Hyderabad International Airport (GHIAL) will be the driving force for aviation business at Hyderabad, claims T
Srinagesh, chief operating officer of the company. The company is planning to establish a training centre near the airport to impart training to the young engineers on aviation related trades, which may even be upgraded as a university at a later date, he pointed out.
Revealing that the state government has provided VAT exemptions for the first five years operations to the MRO project, Srinagesh said that the civil works have already commenced at the site by Lufthansa
Technik.
Source: Indian Express
Chidambaram calls for basic tax structure
Hyderabad, August 1, 2007: Finance Minister P. Chidambaram today called for a basic tax structure that is broad-based and oriented to low tax rates. "As the tax base becomes wider and tax compliance becomes better, we should not hesitate to reduce tax rates further as in an environment of a rapidly growing economy, we ought to be prepared to act on the premise that revenues would nevertheless be even more buoyant," he said.
Chidambaram was addressing the 10th convocation at the University of Hyderabad here. He said the government needs to ease into the role of a regulator rather than be a decision-maker in the sphere of productive activity. "India should be ready to discard archaic decision making processes and controls," the Minister said. "In a demonstration of close cooperation between the Centre and states, the states have introduced the broad-based value-added tax (VAT), replacing the earlier sales taxes. In the same vein, preparations have begun for the introduction of goods and services tax (GST) on April 1, 2010, he said.
Excise to check evasion in VAT :FM
NEW DELHI, July 28, 2007: The excise department could take the help of state governments data bank on value-added tax (VAT) collections besides carrying out
high-impact audits to track evasion. Pointing out that excise duty collections should mirror VAT collections, finance minister P Chidambaram has asked the department to work closely with the state governments to share information.
This exercise was done with Andhra Pradesh, and now we have decided to replicate it all over India, he told reporters after inaugurating a two-day national conference of central
customs and excise commissioners. The department could gather data from states on VAT collections in specific products, industries and cities to detect non-disclosure.
The exchange of information could help the department in tracking excise evasion. The excise collections
witnessed a growth of just 6.8% in the first quarter of this fiscal as against a 25% growth in VAT collections. The high-impact audits are a part of the department's plan to plug revenue leakage from industries such as steel, chewing tobacco,
gutkha, copper and furnace oil. There are some concerns about excise. It is one tax where I think there is high degree of evasion. The high-impact audit must cover assesse products or sectors which are prone to tax evasion, Mr Chidambaram said.
Source: Economic Times Indiatimes
Govt to nail duty evaders
New Delhi, July 24, 2007: The government is planning an intensive audit of companies in sectors that indulge in tax evasion. “The high-impact audit must cover assessees, products or sectors which are prone to tax evasion,” finance minister P. Chidambaram today said at a conference of central customs and excise commissioners. Top officials said the excise authorities have found many steel, furnace oil and paan masala companies evading excise
duty.
The finance ministry has sought information from states on collection trends in value-added tax. This will then be
compared with excise duty collections. “If trends reflect an upswing in VAT collection, there should
be an upswing in excise duty collections too,” said Chidambaram.
VAT collection by states has increased by 25 per cent in the first quarter of the current fiscal, while excise duties have grown by only 6.8 per cent. Excise duty is levied in the pre-manufacturing stage, while VAT is imposed in the
post-manufacturing stage.
Source: THE TELEGRAPH
Tax on TV will promote grey market
NEW DELHI: July 11,
2007: The consumer electronic industry has said the government-proposed levy on television sets (TVs) and radio sets will increase the already high level of taxation, and hence make them
incompetitive. If the proposed levy of 10% of purchase price is imposed, the level of total taxation on radio and TV sets would become 45% and the share of grey market will increase.
At present, the tax structure of colour TVs includes an average customs duty for inputs about 6-8%, excise duty of
16%, CST 4% and state VAT 12.5%. After adding state and local levies, the total level of taxes on radio sets and black and white (B&W) and colour TV sets is about 35%.
"The high level of tax has resulted in about 20% colour and over 75% of radio and B&W TV sets being made in the grey market at present", a statement says. If the levy is imposed, the level of taxation will rise to 45% pushing up prices in the markets, and thus discouraging sales. The increase in price will lead to a larger share of grey market, and hence result in loss of revenue to the Centre and state governments.
Source: Times of India Indiatimes
ITC sees cigarette sales dip
Kolkata July 9, 2007: The cigarette sales volumes of diversified conglomerate ITC are likely to be under pressure in the current financial year, owing to the bleak taxation and regulatory scenario for tobacco.
The combined impact of a 6 per cent rise in excise duty and imposition of 12.5 per cent ad valorem VAT was equivalent to a 33 per cent
increase in excise tax incidence on cigarettes.
This, according to the company, was the highest-ever increase faced by the industry.
Source: Press Trust Of India
Dabur Nepal sues to defend Chyawanprash
KATHMANDU, JULY 04, 2007:
Dabur Nepal, a wholly owned subsidiary of FMCG giant Dabur India and Nepal's largest exporter, has gone to court to defend one of its most popular products, Dabur Chyawanprash, and its
"digestive tablet" Hajmola.
Six Indian companies are among the best-known manufacturers of Chyawanprash, of which Dabur Chyawanprash dominates the Nepal market. Both Dabur Chyawanprash and Dabur Hajmola are certified as ayurvedic medicines by Nepal's Department of Drugs Administration
(DDA) and are therefore exempt from paying VAT.
However, last month, Nepal's Department of Taxation informed the company that the two products were not medicines and would therefore have to pay VAT. Officials at the department told media that they had not yet reached a decision whether they would ask the Indian company to pay VAT on the two products from a future date or from the time they began to be marketed in Nepal.
Dabur Nepal has now gone to Nepal's Supreme Court, asking for a resolution of the dispute. If the tax authorities decide to slap VAT on the two brands since their launch in Nepal, it will complicate matters. The two products are sold at a price that doesn't include VAT and there will be no way the company can collect the tax arrears from thousands of former buyers.
Source: The Economic Times
Honda eyes a bigger Indian share
NEW DELHI, JULY 2,2007: Japanese auto major Honda’s India
subsidiary Honda Siel Cars India today announced the commencement of construction at its second plant at Tapukara Industrial Area in
Rajasthan. Honda is planning to launch its maiden small car from this plant by
October next year. Honda’s initial investment in the plant is to the tune of Rs
1,000 crore. The car plant will have an initial capacity of 60,000 units per
annum.
Just like other states like Uttar Pradesh, Haryana and Uttaranchal, Rajasthan is
doling out sops in the form of duty waivers to attract investment. Honda will be
benefited by sops like electricity and VAT exemption for years and stamp duty
and entertainment tax exemption for 7 years.
AIADMK leader seeks to put VAT on hold
Puducherry: June 28, 2007:
Secretary of the All India Anna Dravida Munnetra Kazhagam A..
Anbalagan, MLA, has urged the Territorial Government to keep on hold implementation of the Value Added Tax to be enforced in the Union Territory on July 1. Addressing presspersons here on Wednesday, Mr. Anbalagan said that the administration had resorted to an ordinance to enforce the VAT, although in all the other States the tax regime was implemented
through a legislation. Mr. Anbalagan said that there was confusion among traders, dealers and industrialists on
pattern of taxation. There should be a special session of the Assembly to address these grievances.
Consumer is king in Rajasthan's VAT compliance scheme
Jaipur, June 25, 2007 (IANS):
Consumers in Rajasthan can look forward to winning prizes worth up to Rs.10,000 simply by asking for a bill after any purchase as the
state government launches next month a unique scheme to ensure better compliance
of the value added tax (VAT).
Chief Minister Vasundhara Raje, who also holds the finance portfolio, had
announced the Dhanlaxmi Scheme in her budget speech in March.'The scheme will be implemented from July 1,
2007 in Jaipur, Ajmer, Bharatpur, Udaipur, Jodhpur, Kota and Bikaner regional headquarters,' Minister of State for
Finance Virendra Meena told IANS.
The VAT system introduced in the state in 2006-07 functions on the basis of a
cash memo, but some traders avoid the tax by not issuing a bill. The scheme is
aimed at plugging the leakage in the tax collection, a senior finance department
official said.
Consumers taking a bill of a value above Rs.100 will be given coupons that can
be deposited in boxes placed at offices of the Sales Tax Department and other
places, he said. Winners will be selected through a draw of lots every fortnight
in Jaipur and every month in other cities. There are 20 prizes of Rs.500 each and one prize of Rs.1,000, Rs.5,000 and
Rs.10,000 each. 'This scheme will help us in shoring up VAT revenues,' he said.
VAT relief for Dabhol
Mumbai June 22, 2007: The Maharashtra cabinet today accepted a proposal to give concession in Value-Added Tax (VAT) to Ratnagiri Gas and Power Pvt Ltd’s (RGPPL) Dabhol plant on purchase of gas from GAIL India Ltd. This is expected to put a burden of around Rs 40.17 crore on the state’s exchequer annually at the present world price of $ 5.94 million metric British thermal units
(mmBtu).
But this loss is insignificant considering the fact that it will reduce the monthly power purchase bill of the
state- owned power utility MSEDCL, once RGPPL starts generating power from gas. The work on the Dahej-Uran-Dabhol pipeline is expected to be completed in 7-10 days.
Currently, MSEDCL is buying power from RGPPL at around Rs 6 per unit and its monthly outgo towards RGPPL is around Rs 150 crore. However, once the plant starts generating power from gas, instead of the costly fuel like Naphtha now, the bill will reduce to little under Rs 3 per unit.
Source: Business Standard
Industry seeks lower Vat in Budget
CHANDIGARH, JUN 18, 2007: Avon Cycles and Hero Group have sought 4% VAT on battery operated electric bikes from Punjab government in the upcoming budget. Lower VAT levy is being sought on footwear, Steel, CFSL Lamps, Desi Ghee and hand tool products by the entrepreneurs
from the budget. "The battery run bicycles has been kept under the 12.5 per cent VAT slab that needs to be
brought to 4 per cent to promote the environment friendly product. The e-bikes that need no registration or license formalities doesn't consume carbon fuels," Omkar Singh
Pawha, MD, Avon Cycles said during pre-discussion with Finance Minster Manpreet Singh Badal organized by PHDCII. "The e bikes hold huge scope for growth in domestic and international market. The products need to be brought under bicycle category and not in 'other bicycle' category that invites higher levy.
The dairy industry in state is seeking relief from the 4% purchase tax on fresh milk apart from other soaps in the budget.
Source: Financial Express
KCCI has demanded rate of turnover taxes
to lower
Srinagar, June 17: The Kashmir Chamber of Commerce and Industry
(KCCI) has demanded rate of turnover taxes in the state be brought down to 0.25 per cent from the present one percent. At a meeting on Saturday with Chairman Empowered Committee of State Finance Ministers (EC) on VAT, Dr Asim Das Gupta, president
KCCI, Dr Mubeen Shah argued that there was no uniformity in the rate of turnover tax across the country.
“While the turn over tax rate in different states of India was fixed at 0.25 percent, Kashmir has to pay one percent. Keeping in view the shattered economy of the state and the need to rebuild the moribund state industry, the rate should be brought at par with different Indian states,” Dr Shah said.
The KCCI also urged that the commodities like handmade Kashmiri carpets and shawls, wood carvings, saffron, raw wool, raw
Pashmina, wool tops, medicines, and green tea be brought under zero per cent VAT.
Engineering exports may turn negative
New Delhi, June 14 (PTI): With no major respite to exporters from the appreciating rupee, the Engineering Export Promotion Council has warned the government that growth in engineering exports will turn negative if the average rupee rate to a dollar falls below 40 during the year.
Commerce and Industry Minister Kamal Nath had said yesterday that his Ministry would ask the Finance Ministry to notify service tax exemptions for exporters and increase duty drawback as well as DEPB rates to help traders tide over the crisis in the wake of the appreciation in the rupee value against the dollar.
Shah said the growth rate of 20 per cent in engineering goods is feasible only if the exchange rate is maintained at Rs 44 during 2007-08. "Engineering exports will then be around 32 billion dollar for the current year," Shah added.
The Council feels that the above targets may still be achieved if exemption of service tax is notified and VAT is refunded.
Government to widen the service tax
June 04, 2007: In accordance with the policy of the government to widen the service tax base, the Finance Act, 2007, has, with effect from June 1, brought seven new services in the service tax net including two significant services relating to renting of immovable property and to execution of works contracts. Perhaps the most controversial category of taxable service brought under the ambit of service tax is "renting of immovable property" for the furtherance of business or commerce.
The value of taxable service has now been defined as the rental amount less the amount of property tax actually paid for the period in
question. The Service Tax Rules, 1994, have been amended to allow for adjustment of any excess service tax paid on account of non
ailment of property tax
deduction at the time of payment of service tax, for the reason of the subsequent payment of the property tax.
On the tax itself, it is a fact that rentals of immovable property used for business or commerce are chargeable to GST (goods and services tax) in several countries that follow the VAT system.
In India, however, in the absence of an integrated VAT, there will be no opportunity to offset these taxes against output taxes, given that this tax cannot be offset against the State VAT. This predicament will be faced by a large section of the retail and information technology sector for whom property rentals are a large part of the cost.
Source: Rediff.com
Jharkhand petrol pump owners on strike
Ranchi, June 01, 2007:
Petrol pump owners in Jharkhand went on an indefinite strike on Friday to
protest the hike in the rate of sales tax on diesel. The state government increased the sales tax on diesel from 15 per cent to 20
per cent from April 2006 when it implemented Value Added Tax (VAT). The increase
in sales tax caused a decline in the sale of diesel in the state. In other states the sales tax on diesel in less than Jharkhand. In West Bengal
the tax is 17 per cent. The Jharkhand Petroleum Dealers Association (JPDA)
demand reduction of tax from 20 per cent to 12 per cent.
Tamil Nadu CM
Karunanidhi announces VAT reduction for Tea
Chennai, May 24, 2007 (PTI): The Tamil Nadu Chief
Minister, M Karunanidhi, on Wednesday announced reduction of Value
Added Tax for tea from four to one per cent. The reduction had been
announced for tea powder, produced both at private and INCOSERVE (tea
growers cooperative) tea factories, during first sale or direct
procurement at auction centres, an official press release here said.
The concession announced for tea farmers and manufacturers would cause
a revenue loss of Rs 2.07 crore per annum to the Government, the
release added.
VAT does not
exist in Bengal on purchase of art, painting and sculpture.
Kolkata, May 20, 2007 : Under a Kolkata high court
ruling, painting and sculpture are classified as handicraft which is
exempted from VAT. Vikram Bachawat, director, Aakriti gallery says
“Kolkata has a lot of scope because VAT does not exist in
Bengal. In every other state buyers have to pay 12.5 per cent VAT on
every purchase of art.”
Emami has tied up with Chisel the parent body of
Aakriti Art Gallery of Hungerford Street, to launch the Art Gallery.
The gallery will look after the auction house to be launched in four
to five months. The auction house to be located in the Emami building
on EM Bypass will cover 14,000 sq ft.
Grey market
rules in branded electronic products
NEW DELHI, MAY 14: The grey market has captured
over 50% of the domestic market of branded electronic products like
digicameras and gaming consoles, forcing local players to reduce
prices 20-30%. Nearly 70% of the $45 million Indian gaming console
market is grey. Because of the high customs duty structure of 37% and
14% VAT on digicameras, the grey market is becoming increasingly
strong. The industry has approached the government to lower the
customs duty.
Reliance Money
to market gold coins
JAIPUR: Apri 4, 2007. Reliance Money, an
Anil Dhirubhai Ambani group company would market gold coins
manufactured by Swiss major Valcambi SA in India. Reliance Money is
the first non-banking company in the private sector to retail gold
coin and would source the 24 carat 999.9% purity gold coins in five
and eight gram. The retails would be done at its select Reliance Money
and reliance World outlets.
A five gram coin would cost Rs 5270 and a eight gram coin Rs
8040.The price would vary each day depending on the prevailing
international price and VAT.
No more tax
cuts on personal computers
NEW DELHI: April 26, 2007. The IT
ministry’s plea for reducing taxes on PCs has not cut ice with the
North Block. The revenue department is of the view that there is no
case for duty reduction as the duties on computers were already low
and on par with tariffs in other countries. IT minister Dayanidhi
Maran had earlier written to the
finance ministry asking for reduction in tariffs on computers and had
taken up the issue again after Dell CEO Michael Dell visited the
country recently.
Taxes on PCs in the country are already low and comparable to levies
in other countries, an official said. India’s total tax burden on a PC
works out 16% compared to China’s 17%. The 16% tax burden is a
combination of 12% excise duty on PCs and 4% VAT.
Source: TIMES NEWS NETWORK
Ficci for a
uniform VAT for all the states.
New Delhi, April 22, 2007: Ficci secretary
general Amit Mitra said there should be one common market in the
country and a uniform VAT for all the states. He said the chamber
would discuss the FDI limit in retail with the government on the basis
of the report by the Indian Council for Research on International
Economic Relations.
The industry chamber said the goods and service tax (GST) should
not exceed 20 per cent and the excise duty should be cut to 14 per
cent from 16 per cent. It also sought 100 per cent tax break for at
least 10 years in cold chain infrastructure. A rise in
disposable income has led to a retail boom in the country. The size of
the organised and unorganised retail sector in India is $328 billion.
The report has predicted that organised retail would grow 22 per cent in
the next three years. It said by 2010, Indian retail would be a
$427-billion industry and by 2011, the country would see a combined
investment of $30 billion by domestic and foreign players.
Amend Delhi
VAT Act
NEW DELHI: April 16, 2007 The
All-India Tax Advocates Forum has urged the Delhi Government to amend
the Delhi Value Added Tax Act stating that it is not trader friendly
and has led to more paper work and erosion in the
distributive character of Delhi. With minor lapses being punished with
severe penalties, the Forum has stated that the Act has given
unbridled arrest and investigation powers to the officials and these
were likely to be misused against the trading community.
Forum president M.K. Gandhi has also stated that a white paper of the
Central Government on VAT had given a guideline which stated that
while enacting the law it would be ensured that the penal provisions
would be akin to the old Sales Tax Act of Delhi. He said there was a
strong case for implementation of these guidelines and for making
suitable amendments in the DVAT Act at the earliest. Reiterating that
an offence against VAT law was essentially of civil nature and needs
to be so treated, the Forum president said the penal provisions as of
date are harsh and there was a need to amend these on the lines of the
Delhi Sales Tax. The Forum has also advocated amendments in the DVAT
Act on these lines. The Forum has further advocated amendment to
default penalty and default assessment and for having a provision for
hearing before the final order. It is a settled principle that the
penalty has to be commensurate with the offence and Section 86 is yet
another provision which needs amendment, its
president said.
Source: The Hindu
Implementation of Value Added Tax
created apprehension among traders
Puducherry:
April 4, 2007
Mr. R. Viswanathan of the Communist Party of India
said that the implementation of Value Added Tax from June 1in the
state had created apprehension among traders. He said that prices of various commodities and petrol and diesel would shoot up. With big companies making forays into Puducherry, retail businessmen would face difficulties.
The CPI member said the Government should address these worries. Ohm Shakthi Segar (All India Anna Dravida Munnetra Kazhagam) said that the Government must take steps to ensure that the proposed VAT did not cause dislocation of industrial and commercial sectors.
West Bengal
may revise VAT rates in 2007-2008
Kolkata, 23 March,
2007
The West Bengal government is open to further revision of the
value-added tax (VAT) rates in 2007-08, without waiting for the
presentation of the next budget. This was hinted by the state commissioner
of commercial taxes, Mr HK Dwedi. Addressing industrialist and
traders on Friday, the 23rd March in a meet, organised by Bengal
National Chamber of Commerce and Industry, Mr Dwivedi said the state
government has already proposed modification in VAT rates on certain
items in 2007-2008 state budget.
Source : ET
States may
soon have same VAT procedure
New Delhi, 19 March, 2007
India Inc will now enjoy the true benefit of common VAT as it
won't have to file diffrent forms in each state anymore.
Harmonized VAT nomendature may be adopted in 2007-08; audit
procedure and form will be finalised by mid next year. Uniform procedure for state VAT would smoothen India's rollover
to single goods and service tax (GST) from 2010.
Source: ET
West Bengal
levied VAT on tobacco and its product to 12.5 percent in budget
Kolkata, 16 march,
2007
West Bengal Finance Minister Asim Dagupta levied a value added
tax on tobacco and tobacco products (excluding bidi) at the rate of
12.5 per cent in his budget presented in the state assembly.
This will generate n additional revenue of Rs. 50 crore to the state
exchequer. The budget also proposes an additional stamp duty of one
percent of market value on conveyance deeds relating to transfer of
high value flat or house.
Assam
Chief Minister proposed to reduce rate of VAT in his Budget for
the year 2007-08
GUWAHATI, March 12, 2007
Assam Chief Minister Tarun Gogoi today presented Rs 2836.24 crore deficit
Budget for the year 2007-08 in the
State Assembly. In his Budget speech, Gogoi proposed to reduce tax on
specified conductors, specified construction items, bitumen,
agricultural income tax on tea, entertainment tax on cinematographic
exhibition, amusement tax on casual shows, jewellery, dry fruits,
cashew nuts etc, while, at the same time, he proposed to increase
tax on audio cassettes in regional languages, supari, bamboo,
activities on luxury boats, etc.
In his tax proposals for the next financial year, Gogoi said that
the Government would lay stress on infrastructure development and
proposed to reduce rate of VAT on specified conductors and specified
construction equipment from 12.5 per cent to four per cent and the
rate of tax on bitumen from 22 per cent to four per cent. The Chief
Minister proposed a series of incentives for rejuvenating the tea
industry and proposed to reduce the agricultural income tax
on tea by five per cent.
12.5 per cent
VAT on tobacco, in Bihar new budget.
Patna, March 5, 2007
A proposal to levy 12.5 per cent VAT on tobacco, part of Bihar Finance
Minister Sushil Modi’s 2007-08 budget proposals, is set to send khaini
and gutkha on a price spiral. A Union budget proposal for a 5 per cent
excise duty hike will make cigarettes even dearer. But "Value Added
Tax cannot be imposed on tobacco till such time as the Additional
Excise Duty (AED) Act is repealed. If any State government levies it
before that, the move will be legally untenable," said Udayan Lall,
Director of the New Delhi-based Tobacco Institute of India, an
authoritative voice on issues concerning the tobacco industry.
MAIT Stresses on
a uniform 4 per cent rate VAT on all IT products across all states.
Friday, February 23, 2007
Manufacturers' Association for Information Technology (MAIT), the
apex body representing India's IT hardware, in its memorandum to the
union finance ministry for the forthcoming union budget, has stressed
on the need for a stable policy regime of the IT hardware industry.
According to the memorandum, inputs/components at no stage should be
at lower excise duty compared to the output/finished products.
Besides, there should be a uniform 4 per cent rate VAT on all IT
products across all states.
TAMIL NADU to amend VAT norm soon
Chennai February 21, 2007
Tamil Nadu will soon introduce an amendment in the value added tax law
that will benefit small dealers opting for compounded rates of tax.
Mr L. Palamalai, Member, Tamil Nadu VAT Monitoring Committee, told
participants at a seminar on `Documentation challenges - VAT and
service tax', that once the amendment is introduced, the compounded
rate of tax would be applicable only on the taxable portion of the
turnover for dealers with a turnover of Rs 10 lakh-50 lakh.
The VAT Act now says that the entire turnover would be subject to tax.
The amendment will enable traders, on second and subsequent sale, to
exclude from taxation the portion of the turnover from items that are
exempt under
VAT, he said.
VAT exemptions on Guar products
Jaipur, February 8, 2007
The Rajasthan Government has exempted VAT tax on
guar and guar products as guar gum, guar dal, and others made of guar
in a notification. Till now there was 4% VAT applicable on guar and
guar products. 90% of guar is exported from the state.
Maharashtra tax revenue falls 20 pc in December 2006
New Delhi January 29, 2007:
A decline of nearly 20 per cent in Maharashtra's tax revenues in December 2006 has marginally pulled down
the overall tax revenue growth rate of VAT-implementing States in the
first nine months of the current fiscal. In December, Maharashtra's
revenues fell to Rs 1,458 crore (Rs 1,805 crore). For the
April-December period, revenues rose by 23.48 per cent to Rs 16,525
crore (Rs 13,383 crore). Official data shows that tax revenues of the
major VAT-implementing States grew by 24.42 per cent during the period
to Rs 83,425 crore from Rs 67,050 crore in the corresponding previous
period. Revenues of the 30 VAT-implementing States (excluding Tamil Nadu, which
moved to the regime from January 1, 2007) had so far recorded growth
rates of 25-27 per cent.
VAT exemptions notified in TN
Coimbatore , January
2, 2007
The Tamil Nadu Government has exempted certain products from payment of tax under the newly introduced Value Added Tax on second and subsequent sales.
In separate Gazette notifications issued on Monday, the Government has said that in respect of fertilisers, the exemption from tax payable under the Tamil Nadu Value Added Tax, 2006 would be applicable to sale of fertilisers to the farmers by any dealer.
In respect of LPG, the exemption from tax was applicable to sale of LPG for domestic use to the consumer by any distributor other than by an oil company. The Government has also notified tax exemption with regard to tax payable on sale of kerosene under public distribution system to family cardholders by wholesale/retail
distributors /fair price shops.
All notifications have come into effect from January 1.
Tamil Nadu
to join VAT regime on January 1, 2007
Chennai , December. 24, 2006
Tamil Nadu ready for VAT regime, with preparations to shift from
January 1, 2007 on schedule, according to the Chief Secretary, Mr L.K.
Tripathi. At a news conference to highlight the State's efforts to implement VAT, he
said that VAT on goods and commodities will only have dampening effect on retail prices.
The Government has announced measures to address the concerns of the small traders and allay their fears on the shift to a new tax regime. Traders with turnover of up to Rs 10 lakh with business entirely within Tamil Nadu have been exempted from VAT, while all traders with a turnover of up to Rs 5 lakh have been exempted. Traders with a turnover of up to Rs 50 lakh have the option of paying compounding tax of 0.5 per cent. Exemptions, deferrals granted under the Sales Tax regime are to continue. The effective tax rate in the State has dropped from 16 per cent to a peak rate of 12.5 per cent. Paperwork will also be simpler as the tax filing is on a self-assessment basis.
VAT ensures that Tamil Nadu joins the tax mainstream, he said. States that have shifted to VAT have observed buoyancy in tax revenues after an initial dip.
TN sugar industry unhappy about VAT law
Chennai , December 19,
2006
The new VAT Act of Tamil Nadu will render the state's sugar industry very uncompetitive, the industry says. The Act has retained the levy of purchase tax on sugarcane at Rs 60 per tonne and there is no input tax credit allowed.
"This makes the industry highly uncompetitive especially in view of fiscal incentives being given by other sugar producing states such as Uttar
Pradesh," says a press release from the Southern India Chamber of Commerce and Industry (SICCI).
Tamil Nadu Chamber welcomes VAT panel set-up
Madurai, December 15, 2006
The Tamilnadu Chamber of Commerce and Industry has welcomed the setting up of a high-level monitoring committee on VAT with representatives from trade, as prayed by the Chamber, by the State Government.
The panel would recommend appropriate remedial measures to the Government to facilitate a smooth transaction to the new system, said the Chamber President,
Mr S. Rethinavelu.
Delhi govt's VAT collection rises
New Delhi, December 1, 2006:
The sealing drive against unauthorised commercial establishments notwithstanding, the Delhi government's coffers are swelling with the VAT revenue crossing Rs 5000 crore this fiscal, 18 per cent higher than the corresponding period last year.
"Till November this year, we mopped up Rs 5,065 crore through VAT against Rs 4,288 crore in the corresponding period last year," Delhi Sales Tax Commissioner Archana Arora said.
"With this pace we hope to surpass magic figure of Rs 8,000 crore by the end of this year," she said.
Plea to constitute VAT panel
in Tamilnadu
Madurai , Nov. 23,
2006
The Tamilnadu Chamber of Commerce and Industry has appealed to the State Chief Minister to constitute a high-level advisory committee on Value Added Tax (VAT).
In a statement here, the Chamber President, Mr S. Rethinavelu, pointed out that while welcoming the announcement of the implementation of VAT from January 1, the Chamber has emphasised the need for immediate constitution of the committee. It would include representatives from trade bodies under the Chairmanship of the Chief Minister for sorting out issues and procedural bottlenecks.
VAT panel pact
on compensation
New Delhi, November 4,
2006
The official committee on VAT today said states have reached an
agreement on the compensation package they expect from the centre to
enable them cut Central Sales Tax (CST) from four percent to two
percent from the next fiscal.
The empowered committee on VAT will meet the Union finance
minister, Mr P. Chidambram next month to discuss with him the panel's
proposal on the the package, committee chairman, Mr Asim Dasgupta told
reporters here after the panel' meeting. All states that had implemented valu added tax (VAT) have shown
a 32 per cent growth in tax collection amounting to Rs 34,019.46 crore
during the first half of this fiscal as compared to the corresponding
period of previous fiscal.
Source: Statesman
Revenue income up in
VAT regime
Gwalior, October 14, 2006
After implementation of VAT regime. Madhya Pradesh has registered
20.92 per cent increase in revenue income. Commerce and Industry
minister Babulal Gaur told media persons here on Friday. He said
self-assessment of tax was one of the main features of the VAT and
business community would appreciate it. Gaur said tax had been reduced
from 12.5 to 4 percent on many commodities including glucose, gelatin,
copper wire rod, ropes of all types, flour mill and its spare parts,
sweets, namkin, and power filters. Some commodities had been totally exempted from tax. Gour
informed that hotels set up under new tourism policy would get
facilities at par with new industrial units. Commodities sold to units
operating in special economic zone would be exempted from tax.
Source: HT
Bharti Airtel served notice to pay Rs 24.2-cr VAT
Banglaore , October. 10. 2006
The Department of Commercial Tax had issued a notice to Bharti Airtel demanding payment of Rs 24.18 crore by way of value added tax with penalty for 2005-06 saying broadband providers are liable to comply with the obligation.
According to Government sources, tax liability estimated at Rs 1,200 crore was due from the broadband providers, both in public and private
sector.
Sugar strike in protest of VAT
Mumbai, October 04, 2006
Trading in the sugar market came to a halt in protest against the Value Added Tax (VAT) imposed by the government, traders at the Bombay Sugar Merchants' Association said.
Federation of Associations of Maharashtra president Mohan Gurnani said the retail traders have decided on an indefinite bandh if the government fails to withdraw the VAT by October 10 this year.
(UNI)
VAT revenue growth up 26 pc in April-Aug, 2006
New Delhi, September 23, 2006
The switchover to VAT system by states has yielded positive results with 21 of them, which have joined the new
tax system right from the beginning of the last fiscal, experiencing a 30 per cent rise in revenues in the first five months of the 2005-06 over a year ago period. If all states, including 6 more which switched over to VAT system later, are taken, the rate of growth stood at 26 per cent, VAT panel Chairman Asim Dasgupta told reporters here today.
Biscuit makers seek cut in VAT
Hyderabad , Sept. 4, 2006
The Biscuit Manufacturers Association (BMA) has urged the Government to reduce the VAT of 12.5 per cent charged on the industry to 4 per cent.
The BMA President, Ms Maria Iyer, told newspersons here recently that it was highly unfair to levy 8 per cent excise duty on biscuits while other items such as bread, potato chips, cheese, pasta and namkeens were completely exempted from excise duty.
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