The Hindu : Andhra Pradesh News : State geared to implement VAT from next fiscal

Online edition of India's National Newspaper
Friday, Oct 08, 2004

Andhra Pradesh

Andhra Pradesh

State geared to implement VAT from next fiscal

By Our Special Correspondent

HYDERABAD, OCT. 7. Andhra Pradesh is fully geared to implement the new VAT regime from the next financial year a senior official of the Commercial Taxes Department told The Hindu on Thursday. In the last winter session of the Assembly, the VAT Act was passed and was awaiting the assent of the President, A.P.J. Abdul Kalam. Apart from creating awareness among traders and imparting training to officials on the concept of VAT, a specially-designed software "VASTIS" had been put in place.

He said the software developed by Tata Consultancy Services was totally customised to meet the requirements of Andhra Pradesh. It needed a little bit of fine-tuning by incorporating some changes suggested by the Centre recently.

Statewide connectivity

The unique feature of the software was that it would issue "internal alerts" to officials when a dealer was due for tax payment and calculate the penalty by eliminating the element of discretion.

VASTIS would be connected all over the State and the officials would be trained in its operation.

In order to deal with various VAT-related aspects, the department was also setting up a 12-member Project Managament Team, to work on procedures, constantly update the software package and create a massive awareness on the new VAT regime among taxpayers.

Once a uniform rate was implemented by all States, there would be basically three main rates of tax-- four per cent on agricultural products and their inputs; one per cent on commodities like gold, silver and jewellery; 12.5 per cent (standard rate) on all goods not listed in any of the other schedules, and demerit goods like petrol, diesel and liquor with the States having the liberty to levy their rate of tax.

Of the total 3.7 lakh dealers in the State, about 1 lakh having a turnover of Rs. 40 lakhs a year would be required to have VAT registration. The dealers with a turnover of below Rs. 5 lakhs would not have any tax obligation and those having a turnover between Rs. 5 and Rs.40 lakhs would have to pay a "composition tax" of one to one-and-half per cent. They need not go in for VAT registration, but the option of joining "the VAT club" was left to them.

Rates to decrease

After the implementation of VAT, the tax rates on 15 items, including cement, refrigerators, cosmetics, paints, motor vehicles, confectionaries and chocolates would come down, as the current sales tax on them ranged from 12.5 per cent to 20 per cent. With the State likely to lose around Rs.1,350 crore on account of loss of revenue, the Centre had agreed to compensate 100 per cent for the first year, 75 per cent the next year and 50 per cent for the third year. In the subsequent years, the tax net is expected to be expanded once the VAT regime stabilises.

Printer friendly page
Send this article to Friends by E-Mail

Andhra Pradesh