VAT phased out in TS

Dealers file the final returns of income in the city

The twelve-year journey of Value Added Tax (VAT) in the State ended on Thursday with its dealers meeting the deadline for filing of the final returns of income.

Nearly 90% of 2.37 lakh VAT dealers, who have migrated to the GST regime, would now begin to file their returns in the new tax system in August-September. The State government used to mop up ₹2,800 crore every month under VAT.

VAT Act

The repeal of the Telangana Value Added Tax Act, 2005, (except in case of liquor and petroleum products which continue to attract VAT) by the Telangana GST Act, 2017, would not affect assessments, adjudication and legal proceedings on returns filed by the dealers hitherto, Principal Revenue Secretary Somesh Kumar told The Hindu .

The VAT replaced the General Sales Tax, in vogue since 1957, in the combined Andhra Pradesh from April 1, 2005. It was levied on dealers who had a turnover of ₹40 lakh and above while those with a turnover below ₹Five lakh were left out.

Curiously, the Andhra Pradesh Assembly passed the Value Added Sales Tax Bill in March 2003 and sent it for Presidential assent. But the government postponed the implementation as many States were not fully prepared and also, there was no convergence in the VAT Bills of various States.

The sluggish economy in 2002-03 was another reason for the initial postponement. The general elections in 2004 further postponed the implementation to 2005.

The convergence in VAT Bills was required as the tax system envisaged uniform floor rates of sales tax in all the States.

All the State governments had agreed for uniformity and similarity in the VAT system by accepting the recommendations of an empowered committee.

The committee, comprising State Finance Ministers, finalised 20 important items of convergence/uniformity required to be adopted by all the States.

The Presidential assent to the Sales Tax Bill was received in December 2004 on the assurance by the State governments that the VAT Bills already passed by them would be suitably amended to incorporate the 20 items of convergence.

The Andhra Pradesh government later felt that no amendment could be made to a Bill that was not notified. Therefore, the entire Bill with the proposed amendments was redrafted as the A.P. VAT Act, 2005.