Talking to reporters today, the additional commissioner of the commissionerate, Mr Vallabh Kamat said the VAT has been very successful in the state, and major refunds would begin from the second year of implementation of the new tax system.
“We expect another Rs 30 to 40 crore towards refunds, on the maximum side,” he said, adding “beside export refunds, there would be accumulated refunds.”
Under the VAT regime, refund is a mechanism wherein the input credit tax continues and through self-declaration by the traders, adjusted against the output.
Mr Kamat also said that the period of 24 months for cash refund of unadjusted excess credit, provided to traders under the VAT Act, has now been reduced to 12 months in support of the industry. “The notification to this effect would be out soon,” he informed.
Mr Kamat further said that a number of changes have been introduced in the Act for polishing the rough edges of the new tax system. The new rate schedule notification would be out today, it was informed.
The changes include reduction of rate of tax on IT products for inter-state sale. The IT product list has been expanded with inclusion of more products and these items are available at concessional rate of half per cent for inter-state sale.
The foreign liquor rate has also been brought down by 2 per cent, at par with Indian manufactured foreign liquor including beer. Re-salers, excluding liquor traders, will now get a relief from the existing 1 per cent and have to pay half per cent tax; the liquor traders, on the other hand, required to pay 5 per cent under separate category.
The other changes are inclusion of tractor tyres and tubes as attachment to tractor at 4 per cent instead of the existing 12.5 per cent. The industrial input list has also been further expanded to give benefit at 4 per cent.
Furthermore, the composition scheme has been amended to raise the turnover ceiling from Rs 40 lakh to Rs 50 lakh.
Replying to a question, Mr Kamat said that the composition in restaurants which stood at 3 per cent would be bifurcated for liquor serving and non-liquor serving restaurants. For the liquor serving restaurants, it would be increased to 6 per cent, he added.
Mr Kamat acknowledged that the commissionerate did receive many complaints from consumers against the charges quoted by restaurants for their services. “However, we have taken a lenient stand in this matter as it is the first year of implementation of VAT in the state and not penalised any restaurant,” he disclosed.
Answering yet another question, Mr Kamat said the small contractors paying 1 per cent tax will now have to pay 2 per cent tax, by keeping deduction at 1 per cent. “This would stop our leakages by refunds,” he added. The additional commissioner maintained that there would be value additions at every point of sale, as all the points of sale would be tapped.
It was informed that the commissionerate would save Rs 8 crore by way of the government decision to change the exemptions given to fishermen in various categories to subsidies, for there are no exemptions proposed under the VAT regime.
Mr Kamat also said that the entry tax reforms have been proposed by the commissionerate to the government, and are being worked upon. “Since there is rationalisation in the VAT system, there is no scope for change in the VAT rates,” he said, with a hint that reforms in luxury and entertainment taxes would soon follow.
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