VIJAYAWADA: Speakers at a workshop on "VAT" organised by the Krishna District Chemists & Druggists Association at Hotel Manorama here on Friday observed that dealers would have the advantage of paying less tax under the new VAT regime when compared to Turn-Over Tax system.

They advised all the dealers to go for VAT registrations as they would have to pay four per cent tax only on profit unlike more tax under TOT.

The Deputy Commissioner of Commercial Taxes, Krishna East, D. Venkateswara Rao, and his Krishna West counterpart, U. Edukondalu, explained the nitty-gritty of taxation under VAT and responded to clarifications sought by participants.

Fears allayed

Chemists and druggists from all over the district participated in the workshop, when the officials sought to allay their fears on different aspects of VAT.

Mr. Rao pointed out that drugs and commodities would display two types of prices -- one is value and 4 per cent tax and the other, value inclusive of tax. "There is no problem in calculating tax component in the first case. In the second case, a dealer should divide the value by 26 to know tax involved. This is applicable to medicines only," he added.

The general secretary of Krishna District Chemists & Druggists Association, P.S. Patnaik, said all dealers whose turnover would go beyond Rs. 40 lakhs should take VAT licence compulsorily and they would have to pay only 4 per cent tax only on profit percentage which would be regardless of the total amount of turnover. Dr. Patnaik pointed out that the four per cent tax would have to be calculated on profit only which would make them end up paying comparatively less tax under VAT.

Detailing the sale-purchase mechanism under VAT, Dr. Patnaik said that wholesale and retail dealers should purchase medicines only on indent and they would have to preserve duplicate indent copy for a period of two years.

He said that dealers whose turnover would not cross Rs. 5 lakhs should apply for general registration number (GRN) though VAT rules would not be applicable for them.

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