Buoyancy in revenue collections post-VAT

Special Correspondent

NEW DELHI: As had been anticipated by the Centre, States have posted a 12 per cent growth in revenue collections in the first quarter of the current fiscal following implementation of the Value Added Tax (VAT) regime in lieu of sales tax from April 1.

The introduction of the new tax regime, according to the Empowered Committee of State Finance Ministers on VAT, has improved tax compliance among the traders while bringing down the prices of most items.

Following a review meeting here on Saturday with the States after three months of VAT introduction, the Chairman of the Empowered Committee and the West Bengal Finance Minister, Asim Dasgupta, said implementation of the new levy in the States had been "quite satisfactory" in the first quarter of current year. This, he said, was reflected both by the number of registered dealers in the States and the marked growth in revenue through VAT.

"In June, the overall revenue growth was over 15 per cent. Many States witnessed over 20 per cent growth while some recorded 30 per cent,'' Dr. Dasgupta said.

The Secretary of the VAT Committee, Ramesh Chandra, explained that except for a few States such as Andhra Pradesh and Maharashtra, which saw lower revenue growth on account of VAT, the average growth in tax collections during April-June was about 12 per cent. In sharp contrast, the scenario is quite different in certain States such as Delhi, which clocked a revenue growth of over 30 per cent. What is more, even in States where the prevailing VAT rates are lower than the erstwhile sales tax levy, there was buoyancy witnessed in the overall revenue collections, Dr. Dasgupta said.

Enthused by the success, the VAT committee is now hoping to "persuade'' Uttar Pradesh, Tamil Nadu, Uttaranchal, Rajasthan, Gujarat, Madhya Pradesh, Jharkhand and Chhattisgarh to fall in line and switch over to the new tax regime. "There is less resistance from traders against VAT [now] in States, which have not implemented VAT. However, the political leadership has to decide on whether or not to implement VAT,'' Dr. Dasgupta said. "We will visit non-VAT States by August... We hope other States [they] will join us,'' he said.

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