The Hindu : Govt. will hold talks before passing VAT law: Minister

Online edition of India's National Newspaper
Saturday, Jan 04, 2003

Southern States

Southern States - Kerala-Thiruvananthapuram

Govt. will hold talks before passing VAT law: Minister

By Our Special Correspondent

THIRUVANANTHAPURAM Jan. 3. The Finance Minister, K Sankaranarayanan, said here today that he would hold a series of discussions with the industry, trade and farmers on value added tax prior to piloting the relevant Bill in the Assembly.

Inaugurating a seminar on Kerala Value Added Sales Tax Bill, 2002, organised by the Centre for Taxation Studies, the Minister said that VAT was being introduced on an all-India basis and the State could not keep off it. More than 120 countries had implemented the VAT system and several developing economies were now moving toward such a regime. The Government was willing to hear the views of the affected segments and bring in changes to the proposed laws, he pointed out.

Accepting that the new VAT regime was a matter of concern for a consumer State like Kerala, he said that the Centre had given an assurance that it would make good the revenue loss on account of the implementation of VATs. The Government had also invited various sections of the population to give their views on VAT. The Government, he added, was willing to give due consideration to such views and incorporate the necessary changes in the proposed Bill.

He said that seminars would be held at Kozhikode and Kochi and at the district levels to create awareness about VAT. He said that the VAT system was beneficial to the truthful trader who filed his returns on time.

The seminar brought out the salient features of the proposed Bill, particularly the advantages of the new regime. Presenting a paper, Mr R Krishnan Kutty, Deputy Commissioner, Commercial Taxes Department, said that VAT was simple and transparent. There was no hidden tax and no cascading effect. It sought to bring in uniformity, besides minimizing the number of tax rates. Another important feature was that it encouraged voluntary compliance and reduced the scope for under-billing or under valuation.

He said that VAT by design was a self-assessed tax and the onus was on the dealers to ensure correct payment of tax on time. Quick and effective processing of return, detection of defaulters in filing returns, immediate follow-up action and broad audit coverage are necessary to promote voluntary compliance. An effective and sound penalty system has also been provided.

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