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Home>  Value added Tax VAT (Value Added Tax) 2010 (India) News 


   Soya industry gets VAT breather in MP
  New Delhi/ Bhopal December 28, 2010: Soya industry has now more room to breathe in domestic market as the Madhya Pradesh government today exempted de-oiled cake (DoC) from value added tax.The domestic soya crushing units will be given full input tax rebate on de-oiled cake, though Madhya Pradesh hardly has any share in Indian de-oiled cake market. The entire state production of de-oiled cake roughly at 36-40 lakh tonnes per annum goes to international market. Soyabean Processors Association (Sopa) said the state would now be able to participate and compete with the industries of neighbouring states like Maharashtra and Rajasthan.
  “We had a long-pending demand of full input tax rebate as it was tough to compete in the domestic market as neighbouring states do not levy any tax. The decision will boost participation in domestic market. We welcome this step of rationalising the taxation system,” said Rajesh Agrawal, Sopa spokesperson.
  At present soya crushing units, more than 70 in number, pay 7.5% tax that includes 2.2% mandi tax and 1% entry tax on both seed and oil. “In fact, there were losses to soya crushing units. A number of units had been either closed or the workers had migrated to neighbouring states like Maharashtra and Rajasthan due to growing tax evasion incidences. Moreover, this decision will boost prospects of raw material availability for soya de-oiled cake units,” a government 
spokesperson said confirming the report of this decision, which was taken by the state Cabinet today. The state produces 50-60 lakh tonnes of soya and has combined crushing capacity of 125 lakh tonnes. DoC prices are hovering around Rs 18,500 per tonne in the domestic market. Source: Business Standard
FM wants GST rollout with DTC, admits to problems
   New Delhi, December 14, 2010 (PTI) : With the introduction of proposed GST all set to miss the timeframe of April one, 2011, the government today expressed desire to roll it out together with DTC from 2012-13. Addressing a seminar on Goods and Services Tax (GST), Finance Minister Pranab Mukherjee, however, admitted that there are some problems in the way of implementing the new indirect tax system . He said issues relating to constitution amendments required to roll out the new indirect tax system remain to be sorted out with states. 
   Mukherjee said the Centre is willing to consider phased roll out of GST and hence suggested three-year time frame to ultimately roll out one GST rate for all goods and services. "I also desire to simultaneously roll out GST (along with DTC)," the Finance Minister said at a seminar organised by government auditor Comptroller and Auditor General of India (CAG). DTC refers to Direct Taxes Code, which is slated to replace archaic Income Tax Act, from April one, 2012. 
   GST, on the other hand, is expected to replace state-level VAT and excise duty as well as services tax on the Centre's front, besides local taxes, cesses and surcharges. The finance minister said the revised DTC bill will be tabled  in Parliament after standing committee gives its recommendation and hoped that it would be implemented from April one, 2012, as scheduled. However, the roll out of GST has already missed the earlier deadline of April one, 2010, while the government's keenness to implement it from April one, 2011 is also all set to be missed. The Finance Minister admitted  problems relating to constitution amendment bill remains to be thrashed out with states.

  Industry seeks VAT exemption on gems, jewellery exports

   Chennai/ Hyderabad November 25, 2010: The gems and jewellery industry is demanding that value-added tax (VAT) be exempted in Andhra Pradesh on exports of gems and jewellery, like in the states of Tamil Nadu and Karnataka. The Andhra Pradesh government should introduce the "Best Jewellers" award to encourage more jewellers to enter the export market, said Ruban Hobday, regional director of Chennai-based Gem and Jewellery
Export Promotion Council.  Hobday was addressing a gathering at a workshop on "Prospects and opportunities of gem and jewellery sector in AP", organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci) in Hyderabad on Wednesday. Speaking on the occasion, Karikal Valaven, commissioner of industries, said the Indian gems and jewellery industry was one of the fastest-growing segments in the Indian economy with an annual growth rate of over 15 per cent.
  The industry recorded an export turnover of $16 billion during 2008-09, making it a significant exchange earner for the country. The UAE was the largest importer of gems and jewellery from India in 2008-09, with a share of 31 per cent. This was followed by Hong Kong and the US with 25 per cent and 20 per cent respectively, he added.
  According to Shekhar Agarwal, president of Fapcci, there was a need to create more infrastructure facilities for the industry. Common testing labs, exclusive gems and jewellery parks and incubation facilities, besides upgradation programmes for artisans in the sector should be created in places like Guntur, Nellore, Kadapa and Visakhapatnam where traditional designs are being practiced, he said.  Source: Business Standard

  Mamata to take up filmmakers' tax woes with government
Panaji, November 22, 2010 (IANS): Railway Minister Mamata Banerjee Monday said she will take up the film industry's concerns over taxation with the government. Her assurance came after filmmaker Yash Chopra raised the
issue at the start of the 41st International Film festival of India (IFFI) here. Speaking during the inaugural ceremony of the IFFI here, Banerjee agreed to take up the cudgels for the film industry on tax issues with Finance Minister Pranab Mukherjee. 'It is a matter related to the finance ministry and I will take up the issue of taxation with Pranab da (Mukherjee),' Banerjee said. Taxation is too much. I must pursue the matter. The film industry has contributed a lot to the country,' the Trinamool Congress leader said. Chopra earlier said that the Indian film industry would be writing its obituary soon, if it was taxed any further. Chopra slammed the government for devising a virtually strangulating tax regime, which comprised of a cocktail of taxes, including value added tax (VAT) and stamp duty.

  West Bengal hikes 1% VAT on luxury household items

  Kolkata 15, 2010: West Bengal Government incresed VAT Rate on luxury household items. By increasing the VAT on luxury household items from 12.5% to 13.5% and by cutting the non-plan expenditure by 10%, the state would be able to overcome the crisis in next four months

  Industries Ministry planning tax sops to promote electric vehicle use 

  New Delhi, November 10, 2010: The Heavy Industries Ministry has said that it is working on a national plan for the EV industry, which would include such incentives and help in developing the support infrastructure. Expected to be rolled out in a year, the draft notice has already been circulated between other Ministries concerned, while the final Cabinet approval is expected in December. The plan is to form an enabling policy structure giving special  incentives such as tax relief and waiver of other charges for EV customers. By reducing the ownership cost of EVs, it hopes to increase the popularity of such alternative transport solutions. The initial plan is to roll out pilot projects in some small and medium cities.Though EVs enjoy a lower VAT in some States, the plan includes further tax concessions for both the industry and customers, setting up an R&D infrastructure and physical infrastructure such as charging stations and other initiatives such as free parking for EVs,” said an official. The Council will also work with the State Governments to provide fiscal incentives for the use of Electric Vehicles. Currently, Delhi provides the highest incentives for electric two wheelers with a rebate on VAT amounting to 29.5 per cent reduction of the price.

  Average indirect tax rate down to 12.5%, says KPMG study

  November 2, 2010: The average indirect tax rate in India, comprising excise duty, customs duty, service tax, value added tax and other local taxes, has come down from 16 per cent in 2005 to 12.5 per cent in 2010 lower than the global average of 15.61 per cent. The corporate tax rate has also fallen from 39.55 per cent in 2001 to 33.99 per cent in 2010, but it is still high than the global average of 24.99 per cent, says a study. 
  According to KPMG International 2010 Global Corporate and Indirect Tax Survey released today, since 2009 the average global corporate tax has dropped slightly from 25.44 per cent to 24.99 per cent in 2010. The average indirect tax rate rose slightly from 15.41 per cent in 2009 to 15.61 per cent in 2010. "As governments look to recoup lost revenues from the economic downturn,  the entire world is in the midst of a period of considerable change with their taxation regimes. A large number of countries are considering, or are in the process of implementing, substantial reforms of their tax systems," it said.  According to the research, there has also been significant progress in two of the world's major developing economies, China and India, who are at different stages of implementing national value added tax (VAT)/ goods and services tax (GST) systems. Furthermore, the debate in the US has progressed to the extent that consensus is building around the need  for a fiscal solution such as VAT. Source: Busoness Standard

  Jindals failed to pay 12% VAT on jewellery at the airport 

  Mumbai, October 20, 2010 (DNA): The Jindals failed to present themselves at the Mumbai airport on Tuesday after the Custom officials seized their jewellery and other goods on Monday when they returned from London. However, the spokesperson for JSW group said that the Jindals were co-operating with the authorities.
  On Monday the Jindals returned from London by a British Airways flight. They had purchased diamond and platinum jewellery in London where the VAT is not levied. But in India they were supposed to pay 12% VAT which
they failed to, and also failed to declare it at the green channel. The value of the goods is around Rs60 lakh and we are still evaluating,? he said. However, according to sources, the jewellery itself is worth more than Rs1 crore.

   RIL tax battle with UP to impose 21 per cent VAT 
   New Delhi October 14, 2010: Reliance Industries Ltd's legal battle over the Uttar Pradesh government's decision to impose 21 per cent value-added tax on gas is holding up supply to NTPC's two power plants and Indian Oil Corporation's Mathura refinery, despite a group of ministers making allocation to them. While IOC has now approached the Ministry of Petroleum and Natural Gas for permission to receive an equivalent quantity of gas at its Panipat refinery, NTPC is hoping to sign an agreement with RIL for the uncontracted quantity soon.
   RIL supplies 3.57 million standard cubic metres a day (mscmd) of gas to four fertiliser companies in the state ? to Iffco for its Aonla and Phulpur units, Kribhco for Shahjahanpur, Indo Gulf Fertiliser for Jagdishpur and Tata Chemicals for Babrala. Senior officials said pending resolution of the tax dispute, being heard in the Lucknow bench of the Allahabad high court, RIL was seeking bank guarantees from existing customers for the tax incidence on the quantity sold since April 2009. When asked, an RIL spokesperson did not comment. Source: Business Standard

  Iran Has Lowest VAT Rate
  October 8, 2010: Value-Added Tax (VAT) is three percent in Iran, the lowest VAT rate across the world, said head of State Tax Affairs Organization. Ali Asgari explained that it is comprised of 1.5 percent taxation and 1.5 percent duties, IRIB wrote.  According to studies conducted on 140 nations, VAT rates stands between 15-20 percent in 48 percent of nations, while the figure is between 10-15 percent in 24 percent of countries, he said. Iceland, Denmark, Hungary, Sweden, and Norway have the highest VAT rates in the world with 25 percent. 
   Implementation of VAT law will increase transparency in economic activities, cargo transactions and rendering services, the official said. Asgari continued that Taxation Overhaul Plan including VAT law is part of plan to make subsidies target-oriented. Source: Iran Daily

   CTTA urges uniform VAT rate for teas sold at auction
   Coimbatore, September 29, 2010: The Coimbatore Tea Trade Association (CTTA) of India has yet again appealed to the state government for a uniform VAT rate of 1% for all teas sold through the auction centres at first point. Addressing the 28th annual general meeting of the CTTA, its chairman, Mr Chandrakant, highlighted the anomaly in the levy of VAT. While estate teas are subject to 4% VAT, the bought leaf and co-operative factories are categorised under 1% VAT.

  Shortage drives cashew prices to record levels

  Mangalore, Septeber 21, 2010: Fuelled by the shortage of domestic cashew crop, lower supply from the world market, and a considerable growth in domestic consumption, cashew kernels in the domestic market have been witnessing all-time high prices for the past 10 days. On the reasons for the surge, Mr Prabhu said about 40 per cent of the Indian crop had been affected due to inclement weather in April and May. World supply also is lower due to poor crops in West Africa.  Mr K. Prakash Rao, former President of Karnataka Cashew Manufacturers' Association, said there has been a drop in processing capacity in all the processing centres by about 20 per cent. Added to this, the internal market has grown by 15-20 per cent. To a query on North Indian demand for the commodity, Mr Walter D'Souza, former President of Cashew Export Promotion Council of India quoted the example of Delhi and said the Government there had imposed a VAT of 12.5 per cent in the budget. The VAT was cut to five per cent in July-end. Source: Business Line

  Pranab Mukherjee reiterates the urgency in indirect tax regime 

  Delhi, September 13, 2010 (UNI) Reiterating that India’s GDP growth would hover between 8.5 and 8.75 per cent during the current fiscal, Union Finance Minister Pranab Mukherjee spoke about the urgency of bringing a major reform in the indirect tax regime. Speaking at the 179th Annual General Meeting of Calcutta Chamber of Commerce, Mr Mukherjee sought the wholehearted cooperation of the industry as well towards achieving the reforms programme, particularly in areas of Goods and Services Taxes (GST). 
  Referring to the importance of making GTS a simpler issue and see it in perspective of the present system of state level VAT, Mr Mukherjee said a synergy must be evolved to ensure that it did not impose any higher burden on tax payers on one side and limit the scope of revenue generation for the government on the other. 

   Foodgrain may cost more in GST regime
  New Delhi September 9, 2010: Prices of food grains, especially wheat and rice, may go up in the proposed Goods and Services Tax (GST) regime. At present, about half the states do not levy Value Added Tax (VAT) on wheat and rice, though they are allowed to tax these food grains at 4 per cent. In GST, these items may be taxed at 12 per cent at the concessional rate or 20 per cent at the standard rate, unless the Union and state governments decide to exempt these. Currently, there is no proposal to exempt these grains from GST.
  The Centre is pruning its exemption list to align it with states  exemption list for VAT, which includes 99 goods. Food grains do not feature in these items. Even if the government decides to tax wheat and rice at the lower rate of 12 per cent, consumers will end up paying more than the current rate. Food grains will become cheaper only if these are exempted from GST. Apart from VAT, various "statutory charges" are levied on food grains by local governments in the existing regime. While the 4 per cent purchase tax, levied in Haryana, Punjab and Uttar Pradesh, will be subsumed in
GST, other charges like rural development fee, market fee (mandi tax), infrastructure development tax and commission to societies and sub-agents may continue in the new regime.  A finance ministry official said there was no proposal to subsume local taxes on foodgrain, except purchase tax, in GST. Since these are not part of the chain, these will be levied along with GST. The official added the Centre and states might have to exempt the grains from GST because taxing them at such higher rates would be detrimental in a country like India.
  In the existing set-up, total tax on rice and wheat is highest in Punjab at 13.5 per cent, followed by Andhra Pradesh (12.5 per cent on rice) and Haryana (10.5 per cent). In the GST regime, tax on food grains is Punjab
could go up to 21.5 per cent if the 4 per cent VAT/purchase tax is replaced by 12 per cent GST. Other levies add up to 9.5 per cent in the state. 
  In states like West Bengal, Bihar and Gujarat, the tax is only 3 per cent and it mainly comprises other levies which will not be subsumed in GST. Kerala has exempted rice from tax but charges a market fee of 7 per cent. Impact of taxing food grains in GST will have maximum impact on such zero-VAT states.
Source: Business Standard 
Northeast asks centre to reduce gas prices
  New Delhi, August 30, 2010 (IANS): The northeastern states have urged the central government to reduce the prices of natural gas being used in various thermal power projects of the region, a Tripura minister said here Sunday. The power ministers of the seven northeastern states met union Power Minister Sushil Kumar Shinde and Petroleum and Natural Gas Minister Murli Deora in New Delhi last week and told them that unless the government reduces the gas price, the people of the northeast would be burdened with heavy electricity tariff. 'Over 48 percent of the total electricity is generated from the  gas-based thermal power projects in the northeastern region,' Tripura Power and Transport Minister Manik Dey told reporters. According to Dey, the petroleum and natural gas ministry recently hiked the price of natural gas from Rs.2,112 to Rs.5,152 per 1,000 standard cubic metre (SCM) inclusive of 10 percent royalty and 12.5 percent Value Added Tax (VAT).

 Bengal to lose Rs 425 crore for higher VAT rate on handsets

 Kolkata, August 27, 2010: West Bengal is set to lose Rs 425 crore on account of the difference in value added tax (VAT) rates between the state which pegs VAT at 12.5 per cent and the normal income tax (I-T) rate of 5 per cent, said a report by the Indian Cellular Association (ICA). The apex body of the Indian mobile industry stated that multiple VAT rates on mobile handsets across 35 States and Union Territories has resulted in the resurgence of the grey market.
  "India is a price-sensitive market. An increase in VAT in some states to the RNR rate of 12.5 per cent aides the emergence of an internal parallel market. We estimate mobile handsets worth Rs 5,900 crore will
move outside the VAT chain in 2010-11," said Pankaj Mohindroo, president, ICA.
  This manifests in an increasing domination of market supply variables by a situation similar to that of Chinese mobile handsets. The report supports claims of a flourishing grey market with the support of a phenomenon called the "Internal Parallel Market". Source: Business Standard

  Amul wants VAT to to come down to 4 on dairy products 

  Mumbai/ Ahmedabad August 25, 2010 (BS) : In order to provide cushion to milk producers as well as consumers, the Gujarat Co-operative Milk Marketing Federation (GCMMF), popularly known as Amul, has suggested that a buffer stock mechanism for milk products is required in India on the lines of buffer stocking of agricultural commodities like wheat and rice. The federation also wants value added tax (VAT) on dairy products like baby milk food, butter, ghee, cheese and ice-cream to come down to 4 per cent from current 12.5 per cent as it would increase consumer demand, boost milk products consumption and improve their health by way of better nutrition.
  The total milk procurement by GCMMF?s member unions during the year 2009-10 averaged 9.30 million kg per day, which shows a growth of 6.8 per cent over 8.7 million kg per day achieved during 2008-09. Sales
registered a growth of 19.3 per cent to reach Rs 8,005.36 crore as against Rs 6,711.31 crore last year.

ASSOCHAM urges govt to extend Income Tax waiver benefits on cell phones
  August 22, 2010: The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged the government to extend Income Tax waiver benefits to mobile-handset manufacturing in backward areas from 5 years to 10 years to help industry meet 100 per cent local demand for cell phones. In addition the chamber has demanded withdrawal of safeguard customs duty of 1 per cent on mobile handsets with immediate effect to help broad base their sales at reasonable prices.
  In a representation submitted to Ministries of Telecommunications, Commerce & Industry and the Finance by ASSOCHAM President, Dr. Swati Piramal it has also been sought that element of Value Added Tax (VAT) which currently varies between 6-14 per cent should be lowered to less than 4 per cent. 

  Single window system for VAT refunds for Delhi exporters
  NEW DELHI, August 13, 2010: Exporters in Delhi will no more have to rush from one department to another for refund of the value added tax (VAT). The Delhi government Thursday started a single window service to speed up the process of payment of VAT refunds to the exporters.
  "Export promotion has been an important effort of the government at all levels. As exports are free from any tax liability, exporters become entitled for refund of VAT paid on all such purchases before export out of India," said Delhi Finance Minister AK Walia. Inaugurating the first of its kind Export-Import Cell in the department of trade and taxes, he said a separate cell for exports-import has been created to speed up the process of payment of VAT refunds to the exporters and this would help in making their products more price
competitive. The Cell would also deal with imports.

PM asked states to GST implementation 
  Delhi, August 2, 2010: Prime Minister Manmohan Singh asked states to embrace the Goods and Services Tax(GST) from the next fiscal, saying replacement of most indirect taxes by this will help in greater revenue mop up. The Centre earlier this week proposed three different rates -- 20 per cent for goods, 16 per cent for services and 12 per cent for essential items -- under GST. "Reform of tax structure and tax administration isanother important step in resource mobilisation. The GST is especially important in this context and I would urge Chief Ministers to give full support to the effort to implement GST with effect from April 1, 2011," Singh said at the National Development Council (NDC). The GST would replace excise and service tax at the central level and VAT at the state-level. 
  The PM's statement comes at a time when doubts have been voiced by many NDA-ruled states over the implementation of the GST from April one, 2011. The introduction of new indirect tax regime has already been delayed by a year due to differences among the states and the Centre.

  CAG cautions govt on 'teething problems' in GST

  New Delhi July 27, 2010 (PTI) : The much-touted VAT, considered as the precursor to the proposed goods and services tax (GST), resulted in a loss of revenue for 10 states, and many manufacturers did not pass benefits arising out of low taxes to customers, the country's apex auditor the Comptroller and Auditor General of India (CAG) said today. CAG said this while warning the government about some teething problems in the proposed GST. CAG also pointed at the lack of preparedness for the common I-T system, which would enable the rollout of the GST. 
  In a study titled 'Implementation of VAT in India: Lessons for transition to GST', the CAG pulled up the Central government for not monitoring the progress made by respective state governments following the implemention of VAT. It said that absence of monitoring led to manufacturers not passing the benefits of tax rate reduction to the common man. "13 manufacturers did not reduce the maximum retail price of goods, despite a sharp decline in the rate of tax. Consequently, the benefit of Rs 40 crore was illegally retained by these maufacturers in the VAT chain instead of being passed on to consumers," the CAG said. The study, covering 23 states, found that 10 states registered a dip in average revenue during the post-VAT regime, as compared to the pre-VAT period.
  Recently, Finance Minister Pranab Mukherjee had expressed hope that GST would lead to higher revenue for states. In case of revenue loss, he assured full compensation to states. Pointing that "loose ends across the VAT system have created a situation rife with opportunities for tax evasion in the states", the CAG said
that one out of every two dealers had tried to evade tax. "...As the departments detected 56,000 cases of evasion, out of 1 lakh dealers taken up for tax audits and additional demands totalling Rs 783 crore was raised," it said. 
  Pointing to the nascent I-T structure, CAG said, "We found that automation was in a nascent stage across all states, except Kerala." The CAG said that if the VAT structure was implemented successfully, it could have led to a smooth GST regime. "It was known that VAT will eventually lead to GST and a common software developed on a common platform across the states would be a precursor for this shift," the study said. Recently, UIDAI Chairman Nandan Nilekani had made a presentation on I-T infrastructure before the empowered committee of state finance ministers on GST. The government proposes to implement GST -- which will subsume excise, service tax and VAT -- from April 1, 2011. As per the Centre's proposal, goods will be taxed at 20 per cent and 12 per cent while 16 per cent tax will be levied on services.

  Delhi Govt. cut down VAT on the fuel from the existing 20% to 12.5%. 

  NEW DELHI, july 18, 2010 : Diesel in Delhi will cost Rs 2.50 less per litre from July 20 after the state government cut down Value-Added Tax (VAT) on the fuel from the existing 20% to 12.5%. A litre of diesel will now cost Rs 37.60 against the current price of Rs 40.10. The government said its decision to slash VAT was taken after it was found that the city government was losing on revenue on sale of diesel as people preferred to buy the fuel from neighbouring cities of Haryana where the rate was much less.
  Delhi government's decision to reduce diesel prices will not have any impact on freight rates, transporters said, though car companies said the decision would have a positive bearing on the sales of diesel cars. 
GST to help revolutionise tax regime
  JAIPUR, July 14, 2010: "The proposed goods and services tax (GST) would revolutionise the indirect tax regime by facilitating the manufacturer to pay almost all indirect taxes through a single challan," said Sunil Mitra, secretary, Union ministry of finance, while speaking at a panel discussion organised by CUTS International and the department of economics, University of Rajasthan, at Senate Hall on Tuesday. It was held to create awareness on the distinctive features of the direct tax code (DTC) and GST.
  Mitra laid stress on the important role the proposed tax reforms could play in raising resources for the country's infrastructure which is imperative to sustain high rate of growth. He spoke on a wide array of issues related to taxes like area-based exemptions, role of subsidies and concessions and also cleared doubts of businessmen, chartered accountants and students on the new tax reforms.
  The participants urged the secretary to give some special privileges to Rajasthan under the new tax reforms which is yet to be finalised in order to create a conducive environment for industries. Earlier, AD Sawant, vice-chancellor, RU, also drew attention to the role of taxation in facilitating infrastructure development. He urged the secretary to stress on the need to checking tax evasion for raising the tax revenues.  Source: The Times of India

  Media companies oppose tax on copyright services
  New Delhi July 8, 2010 : PVR Pictures, Balaji Telefilms, Yash Raj Films and UTV Motion Pictures have moved the Delhi High Court against the government's recent decision to levy service tax on copyright services. In a writ petition filed before the court on Wednesday, PVR Pictures said, by levying service tax on copyright services, the government was going beyond its powers entrusted under the Constitution. 
  The finance ministry introduced the tax for the first time on July 1, 2010. PVR Pictures, in its petition, alleged that copyrights are treated as goods and the transfer of copyrights are treated as sale of goods, which falls within the domain of taxation by states under Article 246, and not the Union.The taxing entry for copyright services is contained in Section 65(105) of the Finance Act. The company said treating copyright as goods as well as a service is ultra vires (beyond the powers of) the Constitution of India and contravenes Articles 14, 19(1)(g), 265 and 300A of the Constitution.
  As per the service tax notification, all entities transferring for use the copyright in any film or sound recordings would be liable to pay service tax at 10.3 per cent, as well as sales tax on the copyright.
Source: Business Standard 

  Telecom operators seeks duty relief

  New Delhi, July 6, 2010: Telecom operators have urged the government to charge zero goods and services tax (GST) on mobile equipment to encourage local manufacturing. Encouragement to local production is necessary in the wake of security concerns over foreign equipment particularly those from China. Service providers also want GST to include all telecom infrastructure and equipment to ensure complete elimination of the cascading effect of indirect taxes. At present, in addition to the service tax, the sector is saddled with several other charges and levies, including a 10 per cent excise duty on telecom equipment. 
  To eliminate the cascading effect of indirect taxes such as excise duty, VAT, service tax, the government must implement GST in India at the earliest so that telecom equipment become cheaper for the end-user,?
said Bharti Airtel in a written communication to telecom regulator Trai. GST, which will replace the excise duty and service tax at the central level and value-added tax at the state level, besides the cess, surcharges and local taxes, is expected to be implemented from the next fiscal year.
  Finance minister Pranab Mukherjee is meeting state finance ministers on July 21 to discuss constitutional amendments needed to roll out GST.Operators said the lack of subsidies to local manufacturing in the country is a major hurdle, which has led to a dependence on foreign vendors. Source: The Telegraph

  Goa to consider VAT reduction on petro products 

  Panaji, June 30, 2010 (PTI): Goa Chief Minister Digambar Kamat today said the state was examining the possibility of reducing Value Added Tax (VAT) on petroleum products to ease the prices. The Commissioner of Commercial Taxes Department has been asked to examine the possibility of reducing VAT on these products, Kamat told PTI. "Last time, when prices were hiked we had reduced the VAT on it," he said.
  Kamat said that the commissioner of commercial taxes would now examine the situation in other states vis-a-vis reduction of VAT. "Generally, there is uniformity in VAT between various states. This aspect also needs to be considered", Kamat, who is also holding the finance portfolio, said.
  The Opposition Bharatiya Janata Party (BJP) had protested against the petroleum product hike. Party leader Manohar Parrikar had said that the state can reduce the tax on petroleum product so as to give relief to the common people.

  Put pressure on policy makers for GST rollout, FM tells ind

  Surat, June 17, 2010 (PTI): Union Finance Minister Pranab Mukherjee on Wednesday asked the trade and
commerce fraternity to mount pressure on policymakers for smooth implementation of the proposed Goods and Services Tax (GST) within the committed timeframe. Mukherjee's statement comes at a time when the Centre and states are struggling hard to find a common ground for introducing GST, which has already missed the earlier deadline of April 1, 2010. Speaking at the annual installation ceremony of the South Gujarat Chambers of Commerce here, Mukherjee said, "Change in the present system to a new one is bound to find resistance." "I urge the trade and commerce fraternity to mount pressure on policymakers for smooth convergence, which would lead to implementation of GST in a committed time frame," the Union Minister said. The Centre and states have not agreed on many aspects of GST so far, including the structure of tax rate on goods.
  While states want two slabs for tax on goods, the Centre wants one. GST is expected to replace most indirect taxes in the country, including excise duty, service tax at the level of Centre and Vat at the states'
end, besides local levies. Mukherjee said a good monsoon will revive the growth momentum to achieve the target set during the Budget, as the economy remained under pressure due to the vagaries of weather and recessionary pressures emanating from the world economy last year. The minister also said India has achieved a comfortable level of foreign direct investment by crossing the $ 20.9 billion mark.

  States refuse to budge on GST demands

  NEW DELHI, June 9, 2010: State governments stuck to their demands of higher threshold for central Goods and Services Tax and keeping local body taxes and electricity duty out of it, threatening the total implementation of what is touted as the biggest tax reform since independence. The states are demanding dual rate of state-GST to safe-guard their interests, but opposed by the central government which favours a single rate structure for ease. These demands were part of the reply sent by the empowered committee of the state finance ministers in response to a discussion paper. The stand-off casts a shadow over the implementation of GST which FM Pranab Mukherjee is aiming for by April, 2011. "A uniform threshold will not be acceptable to small scale industries, that are tax exempt currently and small traders," said Thomas Issac, Kerala Finance Minister. "Small traders have apprehensions about dealing with two administrations, filling returns. There are practical problems and a solution will have to be found through discussions. But, its not an issue that will break the discussions."
  The government has been negotiating with the states to implement the GST as it attempts to do away with the anomalies prevailing in the current structure where goods and various services are taxed more than once by state and Central government agencies. It is an attempt to create a seamless pan-India market. To avoid the "tax-on-tax", states are seeking more and concessions from the central government as the implementation cut their revenues. The tax which was supposed to take effect April, 2010, is delayed due to disputes. Acceptance of dual rate structure nullifies the very reason behind the GST as it not only complicates the tax structure, but also pushes up the taxation rate.
  The Centre promised to compensate states in full for any revenue loss that they may incur due the new tax.  The new tax, it is proposed, will replace excise duty and service tax at the Centre and VAT and local taxes at the states’ level.  Source: The Economics Times

   Service tax haunts flat buyers 

   MUMBAI. May 26, 2010: Already burdened by galloping property prices, flat buyers are now faced with another fait accompli. For the past one month, many city builders have been asking purchasers to start paying up the 2.5% service tax announced in the Union budget . For example, if the value of the flat is shown as Rs 1 crore in the agreement, the buyer will now have to shell out an additional Rs 2.5 lakh as service tax. Despite strong representations made to the Centre by those in the construction industry , the finance ministry is unmoved. 
  The service tax will be charged on only those residential projects which are still under construction or where a completed building has not received its occupation certificate.  Buyers say they were not informed of the additional levy when they had booked the flats. The Confederation of Real Estate Developers’ Associations of India (Credai) opposed the proposed service tax imposition, saying it would ultimately make buying houses more difficult. Credai has stated that such a move will lead to double taxation. Source: Times of India

   NRI couple jailed in UK for VAT scam

   LONDON, May 23, 2010 (PTI): An Indian-origin couple who fled to India in 2001 after being arrested and questioned in a VAT scam worth nearly 700,000 pounds in 1998 and 1999, has been jailed after they returned to the UK recently. Loughborough-based Rekha Parmar, 43, and her husband, Jiva Parmar, 43, have pleaded guilty for the fraud and have been banned from being company directors for 15 years. While Rekha was jailed for three years and nine months, Jiva was jailed for three years and four months.The scam was described as "carousel fraud", which means a complicated type of cross-border tax evasion that exploits the fact that some countries such as Sweden do not levy VAT

   States raising VAT to drive a hard bargain on GST

   New Delhi May 15, 2010 (BS):  With less than a year left for the scheduled introduction of  the Goods and Services Tax (GST), most states have increased their VAT (value-added tax) rates. The move is seen as an  attempt to extract better compensation from the Centre for loss on account of GST rollout. This will also allow states to negotiate with the Centre for a higher State GST rate.
  The industry fears this “blackmailing” by states may delay GST rollout beyond April 2011 and make things more difficult for the Union government when the Centre and states come to the negotiating table. It also fears this would lead to a higher GST rate, which should have been “around 14-15 per cent.”  “Increased rates of VAT in various states would now cause tougher negotiations between the Central government and the states due to their higher compensation claims. We fear that this might further delay the launch of the GST,” said Amit Mitra, secretary general of the Federation of Indian Chambers of Commerce and Industry.
  States had not increased VAT rates in the last few years. The  trend of increasing the rate caught up only after a task force of the 13th Finance Commission suggested a revenue-neutral GST rate of 12 per cent, much lower than the states’ demand of 18-20 per cent GST. The Finance Commission had also proposed a 
compensation of Rs 50,000 crore to states in case of any revenue loss due to the implementation of GST. States, however, felt it was too little and increased the VAT rate to allow them a better bargain.
Taxes on Tobacco Products 
  New Delhi, May 07, 2010 (PIB) :As per the report, Tobacco Control in India, 2004, about 8-9 lakh persons die annually due to diseases attributable to tobacco use. The health cost of only three tobacco attributable diseases, viz. cancers, lung disorder and cardio vascular ailment was estimated in that expenditure at Rs. 30,833 Cr. (2002-03). Currently, the incidence of Central Excise duty on major brands of cigarettes calculated on the MRP of the product ranges from 28% to 69%. The incidence would be even higher when calculated on factory gate prices. In addition, cigarettes bear state taxes such as VAT, Octroi etc.
  In the 2010-11 budget, the Government has increased the basic excise duty on all tobacco products, except beedis, by around 20%. Chewing tobacco, unmanufactured tobacco and Jarda scented tobacco have been brought under the purview of compounded levy scheme wherein the excise duty is paid based on the number of machines installed in the factory of production. Gutkha is already under the compounded levy scheme since July 2008. In addition, some States also levy VAT on tobacco products.
  This information was given by Minister of State for Health & Family Welfare, Shri S.Gandhiselvan in written reply to a question raised in Lok Sabha today. 

  Higher VAT squeezes cola, ice-cream cos margins

  NEW DELHI, May 5, 2010: For a change, soft drink and ice-cream makers are feeling the heat this summer. Higher value-added tax (VAT) rates and raw material costs have hit the margins even as sales failed to match the rising temperature, partly because prolonged power cuts discourage retailers from stocking ice-cream. "Sales are not growing in sync with the temperatures," said Kapil Agarwal, CEO of Cream Bell ice-cream. So, instead of sitting back and enjoying record sales as North India  suffered the hottest April in 52 years, makers of ice-creams and soft drinks are out in the scorching sun, lobbying for VAT rollbacks or blaming power cuts. 
  Delhi, one of the key summer markets, recently increased VAT on soft drinks from 12.5% to 20%. This has squeezed the margins of PepsiCo and Coca-Cola, which were already under pressure due to high sugar prices. Soft drink makers have increased prices by more than 20% earlier this year and they don’t want to do it again for fear of impacting demand, which has been growing at 20-30%. They are now trying to persuade the state government to roll back the VAT hike. Source: The Economic Times 

  Reforms in tax structure mooted

  NEW DELHI, May 3, 2010 (PTI): Finance ministry advisors have called for reforms in the tax structure for services like shipping, aviation and telecom to make them competitive, as well as put the economy on a higher growth path.A working paper authored by finance ministry senior economic advisor H A C Prasad and additional economic advisor R Sathish asked for rationalising the tax structure in the shipping industry, which pays 12 direct and indirect taxes currently. Taxes like corporate tax, minimum alternate tax, dividend distribution tax, withholding tax on interest paid to foreign lenders, wealth tax, VAT, lease tax and service tax raise the effective tax rate of around 2% under the tonnage regime to around 9%, said the paper, titled Policy for India’s Services Sector. As per the tonnage tax system imposed on shipping a few years back, levies were to be based on assets rather than on revenue. The paper clarified that these are the views of the authors and not the finance ministry. 

  CPI leader demanded reduce VAT on food items in Andhra Pradesh.
  Hyderabad , April 27, 2010: The day-long shutdown called by opposition parties against price rise evoked partial response in Andhra Pradesh affecting transport services. The Telugu Desam Party (TDP), Communist Party of India (CPI), Communist Party of India-Marxist (CPI-M), Forward Block and Revolutionary Socialist Party (RSP) called for the shutdown to protest price rise. Blaming the policies of the central and state governments for the price rise, CPI leader Narayana demanded that the government immediately reduce VAT on food items in Andhra Pradesh. 

  Online payment of service tax of over Rs 10 lakh made mandatory

  Mumbai April 19, 2010: The Central Board of Excise and Customs (CBEC) has made it mandatory for assessees who have paid Rs 10 lakh or more as service tax for 2008-09 to file returns electronically through internet banking from this year. Notifications issued by the government also specify the same for central excise duty paid to mandatorily file returns electronically. In both cases, Rs 10 lakh or more include the amount paid by utilisation of Cenvat credit. While returns for central excise cannot be revised once filed, contents of service tax could be amended once within 90 days of filing returns.

 Traders to observe May 1 as Anti-VAT day 
 April 17, 2010: Traders across the country have decided to observe May 1 as Anti-VAT day (VAT Virodh Diwas) to protest against the Value Added Tax (VAT) Act, Confederation of All India Traders (CAIT) secretary general Praveen Khandelwal said today.At a recent meeting in Nagpur, trade leaders from 26 states decided to fight against the Government for back stabbing them on VAT, he said. He also alleged, ''In VAT white paper, it was agreed and promised to the traders that VAT slabs will never be changed but the entire concept of VAT has been moulded single handedly by the Government.'' Also, around 500 trade leaders from all over the country will meet here on May 25 and 26 to decide the further course of action.

  Fuel traders threaten indefinite strike over diesel VAT
  Delhi, April 09 , 2010 (IANS) : Petrol pump owners in Delhi called off their day-long strike for Friday but 
threatened to observe an indefinite shutdown if the state government does not bring down the value added tax (VAT) on diesel in the next 15 days. They will meet Delhi Chief Minister Sheila Dikshit and Delhi Finance Minister A.K. Walia Monday. They said the sale of diesel had gone down drastically after the    
  Delhi government raised VAT on it from 12.5 percent to 20 percent. The fuel traders Thursday night called off their day-long strike planned for Friday after Dikshit assured them that the government would look into their demand within 15 days. "We have called off the strike for now. If the matter is not given consideration, we would be definitely going in for an indefinite strike," Ajay Bansal, general secretary of the Federation of All-India Petroleum Traders (FAIPT), told IANS."Even Petroleum Minister Murli Deora said our grievances are genuine," said Bansal.

 CAIT to decide action on Goods and Services Tax

  Nagpur, April 05, 2010: Confederation of All India Traders (CAIT) will meet in Nagpur from April 9-10 to discuss its further course of action on Goods and Services Tax (GST), CAIT Secretary General Praveen Khandelwal said. ‘The National Governing Board of CAIT, comprising of leading trade leaders of different states, will meet from April 9-10 in Nagpur to take stock of the current situation and decide whether or not to support implementation of GST,’ he said. 
  When Value Added Tax (VAT) was levied, the Central Government said there will be one tax throughout the country but the state governments have taken a complete U-turn on the issue, he claimed. All states have moulded VAT slabs according to their whims without consulting the traders which has put a question mark on the proposed  GST likely to be introduced shortly, he added.
 ‘The recent hikes in VAT slabs by large number of states, including Delhi, is a clear deviation from the established fundamentals of VAT as guaranteed by the Central Government and the Empowered Committee of state finance ministers in their VAT White Paper released in January, 2005,’ he said. Besides, CAIT national president B C Bhartia said, ‘As per an estimate, there are more than six crore enterprises engaged in unorganised sector which are the real carriers of any indirect  taxation system in the country, as they only collect VAT taxes from the consumers and deposit the same to Government treasury.’ ‘Instead  of giving them a smooth passage which may promote voluntary compliance, the Central and state governments are making taxation laws with a mindset that traders are tax evaders,’ Mr Bhartia added. Source: UNI

  Delhi govt decided to withdraw the value-added tax (VAT) on LPG 

  New Delhi, March 29, 2010: Bowing to mounting pressure from the opposition parties as well as the people, the Delhi government on Monday partially rolled back the prices of LPG gas cylinders meant for domestic consumption as well as the CNG. The Delhi government, in its 2010-2011 Budget announced recently, had withdrawn the Rs 40 subsidy extended to LPG gas cylinders. However, in the wake of increasing public pressure, it has decided to withdraw the value-added tax (VAT) imposed on the LPG. The prices of LPG cylinders in the national capital are now likely to come down by Rs 12-15, meaning the effective hike for domestic consumers would be somewhere between Rs 25 to 28. 

  Delhi Traders carried out a ``VAT Shav Yatra”

  New Delhi, March 26, 2010: In an unusual protest, a large number of traders in the national capital of Delhi  carried out a ``VAT Shav Yatra” and burnt the effigy of Value Added Tax system to register their resentment and anguish over the Delhi government’s move to hike the VAT rates on a large number of commodities in the 2010-11 budget proposals.
  The agitating traders gathered at Bara Tooti Chowk, Sadar Bazar in walled city area of Delhi and criticised Delhi government’s contention that VAT slabs and diesel prices have been raised to mobilise funds for the Commonwealth Games. The Confederation of All India Traders (CAIT), which organized the protest, has also announced that the traders in Delhi will be observing a bandh till 1 pm on Saturday. 

  Tea prices to go up from April in Maharashtra

  Mumbai, March 25, 2010: With the recent hike in value added tax (VAT) on tea and other food items by the Maharashtra government from 4 per cent to 5 per cent, tea prices will rise further from April 1 this year.
“If 12.5 per cent VAT comes into effect from April 1 this year, tea prices would rise by Rs 20-30 per kg. It would be too harsh for the common man at large at a time when the central government is struggling to bring down food inflation. The lower and medium quality tea priced at Rs 180-200 per kg at present would shoot up to Rs 200-220 per kg,” said Harendra Shah, president of Federation of Tea Traders Association of Maharashtra and chairman of Federation of All India Tea Traders Association. 

  Higher VAT to increase smuggling of diesel

  NEW DELHI, March 23, 2010: Increased VAT on diesel will impact the drive against pollution by increasing the smuggling of inferior quality of the fuel from neighbouring states Haryana and UP — where it will be cheaper due to lower state levy — and reduce sales at petrol pumps in the capital. The revised VAT will make diesel in Delhi cost Rs 3.37 a litre more than what it sells for in Haryana and approximately Rs 2 a litre more than UP, according to Ajay Bansal, general secretary of Federation of All India Petroleum Traders. The dealers are considering downing shutters as a mark of protest and will take a call at a meeting on Tuesday. 
  ‘‘VAT means death knell for Delhi dealers who have lost 70% of sales to the  neighbouring states in the last two years. With the new rate, the price difference with Haryana has jumped three times from Re 1. What is the alternative for us... At this rate, we will go out of business soon,’’ Bansal said. At present, some 1,200kl (kilolitres) of diesel is sold daily through 408 petrol pumps in the city. Bansal fears that this quantity will fall sharply now as business will get diverted to neighbouring states and make petrol pumps in Delhi unviable. ‘‘Trucks and vehicles will top up in these states, where inferior quality fuel is sold, before entering the city. This will severely impact efforts to check pollution. You will also see cheaper and lower grade of diesel being smuggled into the city, which will increase once Euro-IV fuel is introduced in Delhi from April 1,’’ Bansal said.  Source: The Times of India

  Chavan justifies one per cent hike in VAT

  Mumbai, March 17, 2010 (PTI) : Maharashtra Chief Minister Ashok Chavan today justified the hike of 1 per cent in existing VAT saying the state government had the right to decide on taxation to augment its resources. "There is nothing wrong with it," Chavan said while addressing a press conference after hosting the customary tea party on the eve of the first budget session of the state legislature beginning here tomorrow.The government hiked the Value Added Tax (VAT) from 4 per cent to 5 per cent last week.
  Chavan criticised opposition Shiv Sena-BJP and MNS for boycotting the tea party hosted by him. "It is customary for them to do so. My government is ready to discuss any issue raised by them during the session," he said.The Chief Minister said the government has already taken steps to ease the hardships of the common man due to price rise.

  Traders Up in Arms Against the hike in VAT Rates
  Bangalore, March 16, 2010: Traders across the country are up in arms against State Governments for gross deviations in the Value Added Tax (VAT) regime and have threatened to move the Supreme Court to seek justice. Confederation of All India Traders (CAIT) General Secretary Praveen Khandelwal has decried the tendency of a large number of State Governments over what he termed as their complete U-turn on the 21 points of list of convergence mutually agreed by all State Finance Ministers. 
  In a press release, he criticised the Centre’s offer to hold talks with State Governments at this stage as ``totally meaningless” as they have not kept their promises. Instead, they broke the agreement. `We have no alternative but to take legal recourse and force the state governments to reverse the wrong decisions taken by them,” he said.   VAT was agreed by traders when all the States gave them a clear formula of how it will be implemented  and their solemn promise that the taxation slabs will be changed only after holding consultations with all the traders. But these promises have not been kept, he explained.
 "The increase in floor rates of VAT from 4% to 5% and 12.5% to 15% by various States was a big betrayal. They levy of a surcharge on VAT by the Haryana government was the last nail in the  coffin,” he said pointing out that it had sent a wave of resentment and protest amongst the traders  of the Country.
"It is an established fact that VAT and surcharge cannot go hand in hand,” he said wondering how the traders can trust the Centre and the States on the Goods and Services Tax (GST) system to be adopted 
soon in India.”  Khandelwal warned that the traders have been  forced to give a rethink on GST as well and 
neither the Centre nor the State Governments have kept their promise.When the VAT system was introduced in the country  in 2005, the Centre and the Empowered Committee of  State Finance Ministers had assured the Country about simpler taxation system based on certain basic fundamentals. 
  The White Paper on VAT released by the then Finance Minister P Chidambaram had specifically assured that with the introduction of VAT, there would be uniform rate of taxes on different  commodities in all States across the Country and floor rate of tax will not be amended or altered  by any State and all other taxes like surcharge, turnover tax and additional tax will go away, Khandelwal said. Source: Daijiworld Media Network

CAG recommends VAT on fabric, sugar in MP 
   March 13, 2010: The comptroller and auditor general (CAG) of India has said the Madhya Pradesh (MP) government should levy the value added tax (VAT) on fabric, sugar and tobacco. In its report for the year ending March 31, 2009, tabled today in the state Assembly, CAG said, "Fabric, sugar and tobacco products are tax-free goods, unless additional excise duty is levied on them under the Central Excise And Tariff Act 1985. Since the central government has exempted these goods from the additional excise duty from March 2006, they are now eligible to be taxed at the rate of 4 per cent." The report has also recommended to make amendments in the VAT provisions of the act to check losses in revenue. The CAG has said in its pre-VAT (2003-2006) and post-VAT (2006-2009) audit, that there was a loss of revenue due to lack of certain provisions — name of commodities, in the form prescribed for filing return, has been observed as missing. "As most of the cases under the VAT regime are to be covered under self-assessment, it is not understood how the department plans to scrutinise returns in absence of such details," said the report. 

   Rajasthan govt says new VAT not applicable on essential food items
  Jaipur, March 10, 2010 (PTI): A day after hiking value added tax by one per cent in the Budget, the Rajasthan government today announced that the new VAT rate would not be imposed on essential food commodities such as wheat, rice and sugar.The state government had yesterday in the Budget 2011 proposed to hike VAT rate to 5% from 4% that would come into effect from April.In an official statement issued here, the state government said that the higher  VAT rate of 5% would not be imposed on essential food commodities, including  wheat, rice, husk, sorgham, sugar and oilseeds such as mustard, ground nut, seasame, soyabean etc. It added that the new VAT rate would also not levied on cotton, coal, iron, steel, cotton thread, leather, and jute.On these items 4% VAT would continue as per the Rajasthan VAT Act's Schedule 4, the release said.

   Rajasthan budget raising the lower VAT rate of 4% to 5%

  JAIPUR, March 10, 2010: Chief minister Ashok Gehlot had something to offer everyone in Tuesday's state budget, but it is the economically weaker section and those in rural areas that got a chunk of his largesse. Those hoping for some relief in fuel prices will also be disappointed.Gehlot tinkered with the VAT rates, raising the lower rate of 4% to 5% while leaving the higher rate of 14% unchanged. He, however, moved some goods and services — like CFL bulbs, marble powder, chips, water tankers and food itmes in restaurants and hotels below three star categories — from the 14% slab to 5%. He also exempted cinemas which have a maximum admission rate of Rs 50 from entertainment tax and removed VAT from cinema reels.

  Jharkhand budget diesel VAT rolled back 

  Ranchi, March 7, 2010: It was a budget aimed at sweetening the bitter price rise pill. From cutting down VAT on diesel, sweets and ice- cream to making foodgrains available at Re 1 per kg for the poor, deputy chief minister Raghubar Das today presented an annual budget which focused on rural development, food security and social welfare. Das brought smiles on the faces of children and adults alike by reducing VAT on ice cream and sweets to 4 per cent from the existing 12.5 per cent.
  The minister partially rolled back VAT on diesel to 18 per cent from 20, leaving petroleum dealers unhappy. They threatened to continue their agitation till the government brought it down to 14.5 per cent. Source: The Telegraph

Houses to cost more after service tax
  Mumbai, March 4, 2010: Now home buyers will bear a 10% service tax on properties under construction. This, even before the title transfers from the developer to the consumer. Union Budget 2010 may have put more money into the hands of consumers. But that promise does not hold true for home buyers. A 10.3% service tax is now applicable on all under-construction properties. So far, till the title in a property was passed to the buyer from the developer and the occupation certificate was handed out, it was understood that there is no "service" that was being provided to customers. However, now the proposed change in the law defines "service" as any receipt of money from the buyer to the developer."Service tax was imposed on developers in 2005. In 2009, the government issued a clarification note based on which we sought legal opinion. And, we were advised that developers did not have to pay service tax," said JC Sharma, MD, Sobha Developers. Source: IBNLive

  Orissa to offer VAT exemption to IT SMEs

  Bhubaneswar March 02, 2010:As part of its endeavour to promote SMEs (Small and Medium Enterprises) in the IT sector in Orissa, the state IT department plans to offer a rent subsidy of Rs 10 per sq ft to these units. Sources close to the state IT department said, plans are also afoot to offer other enabling measures like exemption of electricity duties and value added tax (VAT) for IT SMEs.These measures would be included in the new ICT (Information and Communication Technologies) policy of the state government. Earlier, SMEs had sought complete exemption from VAT on hardware procurement by the units, investment subsidy and employment subsidy as well as “plug and play” office space for upcoming units. VAT on IT hardware currently ranges from 4 per cent to 12.5 per cent.

  Goods and Services Tax delayed, now from April 1, 2011 

  NEW DELHI, February 26, 2010 (IANS): Finance minister Pranab Mukherjee Friday said he would introduce major reforms for indirect taxes in the form of Goods and Services Tax (GST) from April 1 next year. The government was earlier scheduled to introduce GST by April 1 this year. "I am confident that the government will be in a position to implement DTC  (direct tax code) from April 1, 2011. It will be my earnest endeavour to implement GST along with DTC from April 1, 2011," Finance Minister Pranab Mukherjee said during his annual budget speech in the Lok Sabha. 
  GST is India's most ambitious indirect tax reform, which seeks to bring together a common market and reduce costs to replace the current fragmented tax regime at central and states levels like service tax, excise duty, VAT, cesses, surcharges and local levies.  

Auto cos wants govt to retain 8% excise duty
  February 19, 2010: IIFL has mentioned auto sector expectations from the budget in its research  report India Strategy dated 17th February, 2010. Last year, excise duty on small cars, two-wheelers and was cut to 8% from 14%, as part of fiscal stimulus. 
  Large cars and UVs attract an excise duty of 20% + an additional surcharge of Rs 15,000 or Rs 20,000 per vehicle, depending on engine capacity. Automobiles attract 8% excise, 12.5% VAT, 2% CST and 1% natural calamity cess.
 This, together with the cascading effect takes total taxation to 23-25%. Industry demand - Maintain 8% excise duty on small cars and two-wheelers. Reduce excise duty on MUVs designed for transportation of 7 to 12 persons to 8% (70% of these vehicles are used in rural areas). Remove excise duty element of Rs 15,000 on passenger cars other than small cars. Remove 1% National Calamity Contingent Duty (NCCD) on cars, UVs and two wheelers. GST rate of 16-17% for goods and a closer time limit for GST implementation. source: Moneycontrol

   VAT on goods up in Haryana

   Chandigarh, February 16, 2010: The Haryana government has increased the rate of Value Added Tax (VAT) on goods included from Sr. 1 to 101 of Schedule “C” of Haryana Value Added Tax Act, 2003, from 4 per cent to 5 per cent with immediate effect. However, tax on entry in serial No. 102 of Schedule “C”  of the Act and on the declared goods covered in Section 14 of the CST Act would continue to be levied at 4 per cent. A notification to this effect has been issued by the Excise and Taxation Department, Haryana. Source: The Tribune

  The sale of cotton exempted from the VAT

  CHENNAI, February 14, 2010: The State government will soon announce an attractive textile policy, which will further promote investment and employment in the sector, according to Chief Minister M. Karunanidhi. Giving away export awards for 2008-2009 at a function organised by the Cotton  Textiles Export Promotion Council (TEXPROCIL) here on Saturday, he called upon  investors from other States and other countries to invest in the State textile industrial units and assured them of all necessary assistance from the government. 
  The textile sector in the State provided employment to 4 million people, the Chief Minister said his government would do its utmost to protect the industry. The approval for setting up five integrated textile parks at Kumarapalayam, Cuddalore, Vadipatti (Madurai district), Andipatti (Theni district) and Karur had boosted textile investment in the State. Giving an exhaustive account of various initiatives he announced in the Assembly a marine discharge project. The sale of cotton in the State by the Cotton Corporation of India had been exempted from the Value Added Tax (VAT). The sales tax on hank yarn was abolished, helping six lakh handloom  weavers. Source: The Hindu

No impact of VAT reduction on mutilated rags
  New Delhi/ Chandigarh February 08, 2010 (BS): The decision of the Haryana government to reduce VAT on mutilated rags under the Haryana Value Added Tax Act, 2003, would virtually have no major impact on the woolen and shoddy mills in Haryana, even as the government claims otherwise. The members of Woolen and Shoddy Yarn Mill Association maintained, apart from simplifying the process of refund for  woolen and shoddy yarn manufacturers, the decision would have no major impact. Panipat district in Haryana is one of the biggest producers of shoddy yarn with around 300 shoddy units. Mutilated rags imported from overseas are used by the industry in Panipat to produce shoddy yarn. In its cabinet meeting held recently, the state government had announced its decision to reduce the rate of tax on mutilated rags under Haryana Value Added Tax Act, 2003 from 12.5 per cent to four per cent. 
  According to the government, to boost the woolen and shoddy yarn industry, which was under pressure 
due to recession, the decision was taken.President of All India Woolen and Shoddy Mills’ association  Pawan Kumar Garg said earlier mutilated rags were not categorised under specified goods category but with their inclusion under specified goods category, VAT had been fixed at 4 per cent.

  Liquor becomes dearer from April 1

  CHANDIGARH, February 5, 2010: Haryana may witness an upward trend in liquor rates from April 1, when increase in licence fee of vends in the state comes into effect. The hike may go up by 10% in Gurgaon, Faridabad, Panchkula and other parts of the state. Announcing the excise policy for 2010-11 after the state cabinet meeting on Thursday, chief minister Bhupinder Singh Hooda admitted “mahangai ka asar hota hai (inflation has an impact),” while replying to a query on the likelihood of liquor rates heading orthwards. The state government has decided to renew vends of both country liquor and Indian made foreign liquor (IMFL) at a “reasonable” increase of 5 to 10%. 
  The cabinet has also decided to raise value added tax (VAT) on select commodities from 4% to 5% to generate additional revenue mobilisation of about Rs 300 crore per annum. The rate of tax on industrial inputs and packing materials, cereals, coal, cotton, cotton yarn, iron and steel and oil seeds will remain unchanged. Tobacco products, including cigarettes, will also be dearer as the tax on them has been increased from 12.5% to 20%. The raise would not be applicable on tobacco products used in ‘bidi’ and ‘hukka’.  Source: The Times of India

  GST will not be introduced from April 1, 2010 

  NEW DELHI, January 30, 2010: After many doubts and much speculation, it’s now official. The proposed Goods and Services Tax (GST) which is to replace most of the indirect taxes levied by the Centre and the States will not be introduced from April 1, 2010. A fresh date for its implementation will be announced 
in April after a meeting between the States and the Union Government.
  Speaking to the media after a meeting with Union Finance Minister Pranab Mukherjee here on Thursday, Empowered Committee of State Finance Ministers chairman Asim Dasgupta said: “Because of the difficulties connected with the passing of the required constitutional amendment Bill in the Budget session, it will not be practical to introduce GST on April 1, 2010. The new date for [its] introduction, the Union Finance Minister suggested, would be settled in April.”
  As per the original schedule of implementation, the GST was to be launched from April 1 this year to bring about uniformity in the indirect taxation structure throughout the country by doing away with Central levies such as excise duty and excise tax along with the value added tax (VAT) and octroi at the State level. Source: The Hindu

Rajasthan govt has announced VAT exemption on imported sugar
 JAIPUR, January 29, 2010 (PTI): The Rajasthan government has announced VAT exemption on imported sugar in the state till June 30, in a bid to control the spiralling sweetener prices. "The decision to exempt four per cent VAT was taken by Chief Minister Ashok Gehlot yesterday, following which sugar price will 
decrease by Rs 1.6 to 1.8," an official said. Sugar prices are ruling between Rs 41-43 a kg in the state. 
"The government has exempted the tax in view of rising prices. After  June, further decision will be taken accordingly after a review of situation," the official added. 
  India, the world's largest consumer of sugar, is estimated to produce nearly 16 million tonnes of sugar against the annual demand of 23 million tonnes. The gap of 7 lakh tonnes is being met through imports. 

Centre, states differ on GST rate structure 
  New Delhi, January 27, 2010 (PTI) :The Centre on Monday opposed two rates suggested by states for goods under the proposed goods Good and Services Tax (GST). "There should be a single rate of SGST (state GST). A two rate structure of goods would pose problems," the Union Finance Ministry said in its comments on the discussion paper on GST mooted by the Empowered Committee of State Finance Ministers. The empowered panel has proposed to adopt a two-rate structure -–a lower rate  for items and goods of basic importance and a standard rate for goods in general. It also suggested a special rate for precious metals and a list of exempted items. However, the Revenue Department said that a two-rate structure for goods would lead to more taxes on raw material and less taxes on finished goods. The structure would also lead to demand of two rates on services which are currently taxed at a single rate.
  The empowered panel has proposed a single rate for services under the GST. The Revenue Department said that different rates for goods and services would imply that the distinction between goods and services should continue. The department also differed with the empowered panel proposal on keeping alcoholic beverages and some petroleum products out of GST.

ASSOCHAM opposes hike in VAT by three states
  January 22, 2010: The Associated Chambers of Commerce and Industry of India has sought immediate intervention of Centre as well as Empowered Committee on VAT to persuade State’s like Delhi, Karnataka and Assam not to deviate from VAT rate fixed by the Empowered Committee on VAT in the interest of consumers. Mr DS Rawat secretary general of ASSOCHAM said that it was unfortunate that State government like Delhi, Karnataka and Assam have increased VAT rate on many products by 1%. 
  Other states will follow the suit, warned Mr Rawat as result consumers that are already reeling under severe heat of price rise of essential commodities would face utter inconveniences with increased VAT rate. He said that Indian industry, mostly in manufacturing segment will not be affected with increased VAT rate as these will drop the burden of increased taxation on consumers which will ultimately be worst sufferers. Mr Rawat appealed to empowered committee on VAT as well as the finance minister to intervene and persuade state’s that has deviated from fixed VAT rate to withdraw it at rates already fixed by the committee. If VAT rates are not brought to original slabs, other states will follow the suit and that would be a very bad precedent in the history of Indian taxation. Source: Steel Guru

   Pawar mulling removal of value-added tax (VAT) on sugar imports 

  January 18, 2010: Prices of sugar, which have more than doubled in the past year, are set to soften in 10 to 15 days, Agriculture Minister Sharad Pawar has said. The sugar crisis took a political twist when Uttar Pradesh Chief Minister Mayawati recently blamed the Centre’s policies for the shortage. The state of UP 
is a major sugar producer and Mayawati said the central government allowing exports in a year of lean output was the chief reason behind the shortage, a move she said intended to benefit mill owners.
  The government extended the deadline for importing refined sugar and said it was mulling removal of value-added tax (VAT) on imports. The Home Ministry would also crack down on smuggling of sugarcane and sugar in the country, the government promised. Those measures may have now borne fruit now as wholesale sugar prices have come down by about 10% — from Rs 4,280 per quintal to Rs 3,980 per quintal — in the last two days, Pawar said. He added retail prices were expected to come down soon as well.

ICAI wants GST rollout to be delayed by a year
  NEW DELH, January 16, 2010I: The Institute of Chartered Accountants of India (ICAI) has asked the government to defer the implementation of Goods and Services Tax (GST) from April 1, 2010 by an year to allow for a smoother transition to the new indirect tax framework. “For smoother transition, it is imperative that GST be implemented from the first day of a financial year. Since there is very little time for the slated implementation date of April 1, 2010, it is recommended that GST be implemented from April 1, 2011,” the ICAI said in its submission to the government.  
   The ICAI had constituted an expert committee to look into the implementation of the GST structure at the instance of the finance ministry. While favouring a dual- GST structure, the ICAI want the tax to be administered by a common authority. As part of transition measures, the ICAI has suggested that the indirect tax on on-going works contracts/turnkey contracts and lease transactions be discharged on similar basis as like prior to introduction of GST. This it says will safeguard against an increase  in liability for suppliers involved in such contracts from an adverse impact of higher taxation rates under GST. Source: The Economic Times 

Delhi shifted to a 5% Value Added Tax (VAT) slab from 4%.
  NEW DELHI, January 15, 2009: Starting Thursday, Delhi shifted to a 5% Value Added Tax (VAT) slab from 4%. The shift to the 5% slab will impact the prices of medicines, surgical and medical equipment, IT and electronic products like computers and software, and industrial inputs, among other things. The five percent slab will cover 170-odd items.  The draft amendment bill proposing a hike in VAT had been met with much opposition by the trader lobby. The Confederation of All India Traders had earlier raised concerns over the proposed increase in the VAT slab, saying it would lead to a hike in the prices of necessities and affect the common man. 
  But the government moved to pass the amendment Bill in the Delhi assembly in December, and on Wednesday notified the scrapping of the 4% slab and its replacement with the 5% slab. But Delhi Fianance Minister AK Walia is clear the shift to the 5% slab is in keeping with the Central Government's directions on the VAT regime."All items under the 4% slab in the VAT Act are now under the 5% slab. The shift to a 5% slab will lead to an escalation in revenue collections," Walia said. Source: The Times of India

  States have been asked to remove VAT and other taxes on imported sugar

  New Delhi, January 14, 2010: PRIME Minister Manmohan Singh, who chaired a meeting of Cabinet Committee on Prices (CCP) on Wednesday, approved a host of measures aimed at taming the food inflation. The measures include: The Cabinet approved the sale of 5 lakh tonne of wheat and 2 lakh tonne of rice through state-run agencies such as the National Agricultural Cooperative Marketing Federation of India Ltd and National Cooperative Consumers’ Federation of India Limited. Also, 2-3 million tonne of wheat and rice should be released in the open market over the next two months.The CCP has approved extending the deadline for refined sugar imports to December 31. There will be no quantitative cap on imports. The import of raw sugar at zero duty is already permitted up to 31 December 2010. Sugar prices have hit the roof on account of drought in India and flood in Brazil, the two major sugar producing countries. The Cabinet also changed a rule to help millers in Uttar Pradesh, to process nine lakh tonne of imported raw sugar lying at Mundra and Kandla ports, skirting a ban on supplies of imported raw sugar imposed by the Mayawati government in November to quell farmers’ protest. States have been asked to follow Delhi to remove VAT and other taxes on imported sugar. The CCP has also instructed the Home Ministry to crack down on smuggling of sugarcane and sugar from India to Nepal.

Pranab to meet state FMs on Jan 13; govt to miss GST deadline
  NEW DELHI, January 10, 2010: Finance Minister Pranab Mukherjee may meet state finance  ministers this week to discuss their requirements and implementation of proposed Goods and Services Tax, speculated to be delayed by over six months, is likely to be discussed during the meeting. "Finance Minister will meet state finance Ministers on January 13 as a pre-budget exercise," an official said. Among other things, the meeting is also likely to discuss issues pertaining to implementation of GST, which is likely to be delayed by at least seven to eight months, he said. 
  The government had proposed to introduce GST from April 1, 2010, but it would not be possible as the constitutional amendments, necessary for introduction of the new tax structure which will subsume levies 
like excise, VAT and service tax, would take seven to eight months.The government, the official said, may not introduce the amendment bills in the forthcoming Budget session as there is no consensus among the states on rates and modalities of the new tax regime.States, which have been clamouring for more funds to tide over the financial difficulties following the economic crisis which had hit revenue collections, will also raise the issue of compensation on account of phasing out of the Central Sales Tax (CST). Source: The Economic Times

  Low VAT/GST be imposed on processed food: Sahai

  Kolkata, January 8, 2010 (PTI): The Union Minister for Food Processing Subodh Kant Sahai today said Value Added Tax rates or Goods and Services Tax rates (when it will be in place)on processed food should be between zero to four per cent.Speaking at the North-East summit organised by the Indian Chamber of Commerce, he said that if processed food were taxed at higher rates, then the food  processing industry would not be viable for investors.  Sahai said that he had urged Asim Dasgupta, chairman of the empowered committee  of state finance ministers on GST, to keep these products in the above mentioned taxation bracket. Once the production level of processed food increases to 50 per cent from the present level of 10 per cent, tax rates could then be increased. 

  GST launch set to be delayed

  NEW DELHI, January 8, 2010 : By all indications, the proposed Goods and Services Tax (GST) — much-awaited by India Inc. for nationwide uniformity in indirect taxes — is set to miss the April 1, 2010, 
deadline that was slated for its introduction. A decision on fixing a fresh date for its launch is likely on Friday. A day before the Empowered Committee of State Finance Ministers’ meeting with Finance Minister Pranab Mukherjee, panel Chairman and West Bengal Finance Minister Asim Dasgupta said: “Tomorrow, we will discuss the new date for introduction [of GST] and compensation formula to the States with the Union Finance Minister .. Together, we will announce a new date.” 
  Dr. Dasgupta was talking to the media here after a meeting of the State finance ministers on arriving at a revenue neutral rate for the GST which is envisaged to subsume a host of indirect taxes such as excise duty and service tax at the Central level and VAT (value added tax) at the State level, apart from surcharges, cesses and other local taxes.
  Initially, the government had proposed to replace all these levies with GST from April 1, 2010. However, no consensus has been arrived at thus far, either on the mechanism of revenue sharing between the Centre and the States or on the date of its countrywide launch. Besides, the other reason for its delay is the need for Constitutional amendments for rolling out the new tax regime, apart from the preparedness and of all the 32 States and Union territories.  Source: The Hindu

  Industry favours early implementation of GST

  New Delhi January 5, 2010 9PTI): India Inc today asked Finance Minister Pranab Mukherjee to introduce Goods and Services Tax (GST) "as early as possible",  amid speculations that the indirect tax reform may not be implemented from the scheduled date of April 1. "We want that the GST deadline should not be missed," Ficci President Harsh Pati Singhania told reporters after a pre-budget meeting with Finance Minister Pranab Mukherjee along with other industrialists here today.CII President Venu Srinivasan said: "Our view is that even if there are lacunae and flaws in GST, we will correct it as we move along, GST should be implemented as early as possible."  "We want GST  implementation as soon as possible," Assocham President Swati Piramal said.
  Some states, including Madhya Pradesh, Rajashtan, and Tamil Nadu, want the GST implementation to be delayed as there are issues relating to preparedness. In fact, Mukherjee had also said that it might not be possible to introduce GST from April 1. Singhania said in case GST could not be implemented from April 1, Central Sales Tax (CST) should be reduced to one per cent from the current 2 per cent. CST is a levy imposed on inter-state movement of goods and has been cut from earlier 4 per cent to 2 per cent in phases, after VAT was introduced. CST does not conform to the idea behind VAT or GST, as the indirect tax reforms aim at a common market across the country.

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