Southern States - Andhra Pradesh   

VAT may cast heavy burden on State

By Our Special Correspondent

HYDERABAD Feb. 25. The estimated revenue losses to the State Government on account of restructuring of taxes to pave the way for the new Value Added Tax (VAT) regime from April 1, is put at around Rs. 400 crores in a financial year.

In addition the `burden' of VAT implementation might be around Rs. 750 crores comprising Rs. 450 crores input rebates, Rs. 200 crores for reducing tax rates, and Rs. 100 crores in the export segment.

This was hinted at as a broad figure, though reluctantly, by the Commissioner of Commercial Taxes, N. Ramesh Kumar, at an interaction meeting held with the media, to explain the concept of VAT, its implications for the State, industry and trade, and the consumer.

While VAT will bring about rationalised tax structure of 4 per cent and 12.5 per cent (with the exception of one per cent on gold and jewellery and special rates for liquor and petroleum products), what came out clearly was the reluctance to indicate how many commodities will cost less and which will cost more once VAT is implemented from April 1. The legislation is expected to be approved by the Assembly by March 15.

The Centre is creating a fund of Rs. 2,800 crores to Rs. 3,000 crores to compensate States for revenue losses on account of shifting from sales tax to VAT. However the States are demanding a much bigger fund of Rs. 10,000 crores to Rs. 12,000 crores. Given the fact that the State gets 12 per cent of central taxes, Andhra Pradesh can expect a compensation of Rs. 360 crores from the proposed fund.

Value Added Tax, which is a tax on consumption , is collected in instalments at all stages of production and distribution of goods. By giving input tax credit at all stages, it removes any tax burden on businesses and achieves total transparency for the tax finally paid by the consumer, Mr. Ramesh Kumar said.

The loss of revenues to the States will be on account of input tax credit available to all manufacturers and on account of rate of tax on all goods presently taxed above 12.5 per cent coming down in future.

Under the new regime, dealers with less than Rs. 2 lakhs turnover will be exempted from registration and tax liability (which is not available in the present in A.P. General Sales Tax -APGST Act). About 1.5 small dealers are expected to benefit by this provision.

Dealers with turnover of Rs. 2 lakhs to Rs. 20 lakhs will have to pay a marginal rate of 1.5 per cent turnover tax on quarterly basis, without having to maintain accounts. About 1.25 lakh dealers are expected to benefit from this.

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

Southern States

News: Front Page | National | Southern States | Other States | International | Opinion | Business | Sport | Miscellaneous |
Advts: Classifieds | Employment | Obituary |

Stories in this Section

• Govt. declines CBI probe into temple blast
• TCLF opposes Pulichintala
• 2.5-cr. grant for ANGRAU for biotechnology courses
• VAT may cast heavy burden on State
• Bank attender stabbed; relieved of Rs. 7 lakhs
• Sugar unit privatisation process vitiated: court
• Electrification in full swing in Nellore dt.
• RTC Cuddapah region notches up distinction
• Save water campaign launched
• RTC specials for Sivaratri

Copyright © 2003, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu