Tax compliance rises in VAT states, politics rules elsewhere

HARYANA: Haryana was first to implement VAT. Tax collections have already increased and are registering a further hike in the state. The total revenue generation has shot up by 28 per cent, post VAT. The government had also issued Traders Identification Number (TIN) to 1,20,000 traders. ‘‘VAT has quite effectively checked tax evasion,’’ remarks Yudhvir Singh, additional commissioner, Excise and Taxation.

KARNATAKA: ‘‘We are very happy. Our collection growth for April and May has been very impressive,’’ says Dr S. Subrmanya, secretary, finance (budget & resources). The growth in registration of new dealers under VAT is about 20 per cent and this implies fresh revenue for the state. The first month’s tax collections under VAT have shown an impressive 25 per cent growth over the same period last year. The Commercial Taxes department has issued TIN to all dealers and it is being quoted extensively.

ANDHRA PRADESH: Even in Andhra Pradesh tax revenues have gone up, though marginally, after implementation of VAT. ‘‘We have mopped up revenues of Rs 2,380 crore for April 1-June 29 this year compared with Rs 2,334 crore last year,’’ says V. Bhaskar, state commercial tax commissioner. According to him the state government has not yet faced any serious trouble in the implementation of VAT. ‘‘We have already issued 1,22,000 TIN numbers to the traders and they are quoting them in almost all transactions,’’ he said.

NEW DELHI: The state is facing some problems on classification of products, more so in classification of inputs. Delhi had a more detailed classification extending up to eight digits. However, some states like West Bengal and Maharashtra had lists restricted to four digits making them more generic. To accommodate these states, Delhi’s classification was revised. A list of industrial inputs of 217 items was specified, even though specifying inputs is not in the spirit of VAT. The revenue impact of the reduction in rates to 4 per cent in some cases for Delhi is expected to be Rs 200 crore. Also, the Delhi government will have to provide set-off taxes on stock carried forward, foregoing Rs 700 crore.

PUNE DISTRICT: While data for Maharashtra is not available yet, in Pune, the implementation of VAT has been successful. After its implementation, tax collection for the April-May period in 2005 has gone up by 22.51 per cent compared with the corresponding previous period. ‘‘Overall, there has been a substantial rise and the progressive collection has gone up from Rs 342.35 crore to Rs 419.40 crore. By and large, we have had a very positive response,’’ additional commissioner of sales tax D.V. Bhalchandra says. But TIN is yet to be issued to dealers. ‘‘It will take us around six months to a year.’’

GUJARAT: Gujarat preferred to stay away from VAT due to political reasons. Officials in the finance department say they are ready with administrative machinery in place, but the final decision on implementation will be decided by the CM. The plea taken by the state government is that there is no broad consensus amongst state over VAT. The state finance minister and president of the Gujarat BJP unit, Vajubhai Vala said, ‘‘Until there is a consensus among states over VAT, we will not be implementing it. We are ready for implementing VAT since last two years, but consensus is important.’’

UTTAR PRADESH: UP CM Mulayam Singh Yadav said No to VAT despite repeated pleas from Finance Minister P. Chidambaram. And in keeping with Yadav’s anti-VAT tone, state government officials claim that revenue generation in the state has gone up despite VAT not being implemented. According to Atul Chaturvedi, principal secretary, tax and registration, ‘‘Whether the increase in tax revenue has been on account of UP not implementing VAT or due to better administration, maybe both.’’

When the central government redoubled its efforts to convince the state government the need to implement VAT, Yadav played his political card by telling Chidambaram that if he could convince the traders, UP would have no objection to the new tax regime.

(With inputs from Atiq Khan, Ashok Bagriya, Rajesh Menon, Sreekala G, K R Balasubramanyam and Mukesh Bhardwaj)

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