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Home>  Value added Tax VAT (Value Added Tax) Jan-Aug,2009 (India) News                

       VAT (Value Added Tax) News : January - August 2009 News

 Gujarat exempts VAT on imported sugar 

   New Delhi, August 28, 2009: In order to ensure adequate supply of sugar in the market during festival season come October and to arrest the rising prices of sugar Gujarat has announced exemption of Value Added Tax (VAT) on imported sugar. The State Government of Gujarat has announced this exemption yesterday. According to State Government of Gujarat officials, "Gujarat Chief Minister Narendra Modi has decided to exempt imported sugar from VAT". The state government used to charge 4% VAT on sugar. But this will not be charged on imported sugar for the next one year, officials added.

   Biscuit prices to rise by 10%

   NEW DELHI, August 26, 2009: About 40 companies that account for almost one-third of the organised biscuit market in the country will increase prices by 10% across the board from next month to cope with soaring prices of key ingredients like sugar, milk and milk powder. The price hike, the steepest in the industry in two years, will come into effect on September 1, according to the Indian Biscuit Manufacturers Association (IBMA), which represents these second-string biscuit makers whose list include Priyagold, Anmol, Cremica, Bonn and Crown. The top players — Parle, Britannia and, to a smaller extent, ITC — that make up for the rest of the Rs 6,500-crore organised biscuit market in the country, said they are yet to decide on price hikes to deal with rising prices of sugar and wheat. 
  These companies are now demanding a tax cut on biscuit, the only processed food item to attract a 12.5% value-added tax (VAT). Other processed foods like bread, juices and jam are either exempt or levied 4% VAT in all states. IBMA also said it wants the government to allocate sugar to biscuit manufacturers in the small and medium size segment , particularly in view of a deficient monsoon. 

Exporters seek FTP sops to regain markets
   NEW DELHI, August 25, 2009: Faced with intense competition in the shrinking global market for goods, exporters want the foreign trade policy (FTP), to be announced on Thursday, to provide for direct incentives- such as cash support and tax exemptions-to help them price their products better. Some claim that if the government does not do enough in the FTP to help them increase exports, they may lose some markets permanently. India's exports plunged into the negative territory last October and has stayed there for the last ten months with the latest growth figures hovering around a negative 30%. 
   "We want a simple policy, one which is pin-pointed towards propelling export growth. Just a 2% subvention of interest rate on loans, that too for a limited period, will not help. The government has to first strategise to pull exports out of the negative zone and then work towards growth," Delhi Exporters Association (DEA) president S P Agarwal told ET.Exemption from payment of taxes on all services utilised for export purposes is top on the list of demands of exporters. While exporters are allowed refund on a number of services availed by them, they want exemption from paying taxes on all services. Exporters also want quicker disbursal of refund of VAT (value added tax) paid by them. Source:The Economic Times 
  States refuse to review sales tax on ATF 
  NEW DELHI, August 24, 2009: Hopes of domestic airlines was dashed on Saturday when the Empowered Committee on State Finance Ministers on Tax Reforms asserted that states were not in a mood to review the sales tax on aviation turbine fuel. “The states are not in a mood to review the (sales tax) rates of ATF,” Value Added Tax (VAT) panel chairman Asim Dasgupta told reporters when asked whether states will lower sales tax rates on jet fuel as global crude prices have come down drastically.
   Dasgupta said states have posed certain questions on aviation turbine fuel (ATF) to the Centre, but have not got a response so far. He said states do not want the Centre to bring ATF in the declared goods category which would bind the states to levy sales tax on jet fuel up to 4 percent only.   Civil Aviation Minister Praful Patel who had made a presentation before the Union Cabinet meeting, chaired by Prime Minister Manmohan Singh last week, had asserted that reduction in sales tax on ATF would not have significant impact on states as it contributed only 1.5 to 2 percent of the total sales tax revenue of states. Source: India Express

Haryana announces benefits for different sections of society and Vat exemptions

  Chandigarh, August 21, 2009: Bhupinder Singh Hooda led Congress government in Haryana at its cabinet meeting here today besides deciding on dissolution of the state assembly seven months ahead of scheduled, also took decisions on giving benefits to different sections of the society, including residents of urban areas, widows and destitute women, artists, sportspersons, media persons and residents of unauthorized colonies.The cabinet also approved a new Sports Policy, new rules for regulating the working of private security agencies and decided to ban mining of major minerals in three districts of Faridabad, Gurgaon and Mewat close to the national capital.
  In a move affecting diplomatic missions, the Cabinet decided to withdraw Vat exemptions on goods sold to Foreign Diplomatic Missions, Embassies and Consulates in India which are not extending such exemptions to India's Diplomatic Missions, Embassies and Consulates located in their respective countries on reciprocal basis. The decision has been taken in view of the number of references received 
from the office of Chief of Protocol, Union Ministry of Ext.Affairs in this regard, an official spokesman said.
Indian biscuits industry asks for 4% VAT to help sector 
   New Delhi, August 13, 2009 – Indian biscuits industry has requested the Government of India to  intervene in the issue of Value Added Tax (VAT) imposed by the state governments on biscuits at the rate of 12.5% which caused shut down of many small and medium enterprises (SME) biscuits manufacturer units in the country. “Indian Biscuits Manufacturers Association has been on the forefront in  vigorously pursuing Biscuit Industry’s request for reducing VAT from 12.5% to 4%. To further highlight acute hardships and heavy losses being suffered by biscuit manufacturers especially those in the SME sector, our Association has again taken initiative and submitted detailed representations to Mr. Asim Dasgupta, Chairman and Mr. Satish Chandra, Member Secretary, Empowered Committee on VAT and similar representations have also been submitted to the Chief Ministers and Finance Ministers, Excise and Taxes Ministers and to the concerned officials of all State Governments. The adverse impact of high rate of VAT along with rising cost of production, prices of major raw material and inputs etc have been highlighted,” Mr. K P Mohandas, Secretary, Indian Biscuits Manufacturers Association, told FoodBizDaily.com 

  Kerosene, domestic LPG prices lowest in India: govt

  New Delhi, August 6, 2009: Kerosene and domestic LPG prices in India are the lowest in South Asia, while the rates for petrol and diesel are comparable with its neighbours, petroleum minister Murli Deora said on Thursday. In a written reply to a question in the Lok Sabha, he said kerosene at Rs9.22 per litre in Delhi is the cheapest cooking fuel in South Asia. Kerosene in Pakistan costs Rs34.89 a litre, Rs30.53 in Bangladesh, Rs21.26 in Sri Lanka and Rs34.35 per litre in Nepal.
  Similarly, a 14.2 kg domestic LPG cylinder in Delhi priced at Rs281.20 is cheaper than Rs483.06 in Pakistan, Rs670.12 in Bangladesh, Rs666.31 in Sri Lanka and Rs702.72 per cylinder rate in Nepal, he said. Petrol at Rs44.63 in Delhi is costlier than Rs36.52 a litre price in Pakistan but cheaper than Rs51.36 a litre price in Bangladesh, Rs54.19 in Sri Lanka and Rs34.35 a litre in Nepal.
  Deisel at Rs32.87 per litre in Delhi was a shade higher than Rs30.53 rate in Bangladesh and Rs30.43 a litre price in Sri Lanka. But it was cheaper than Rs36.82 a litre price in Pakistan and Rs34.35 per litre rate in Nepal, he said. “Taxes and duties of the Centre and state governments constitute 48.4% and 24.5% of the retail prices of petrol and diesel respectively at Delhi,” he said.States sales tax or VAT on petrol varies from 18 to 33% and from 8.80 to 26% on diesel.

  EPCH hails VAT reduction in Rajasthan
  New Delhi , August 2, 2009 (PTI): The Export Promotion Council for Handicrafts (EPCH) has hailed the decision of the Rajasthan government to reduce value-added tax (VAT) on wood and stone items in the state. Recently the state government reduced VAT on wood and stone articles to 4 per cent from 14 per cent. Rajasthan is famous for its wood and stone works on handicraft items. 
  The state, where an estimated four lakh perons are engaged in the handicraft sector, had exported handicraft items worth Rs 1,894.56 crore in 2008-09, EPCH said, adding, Rajasthan has a share of 23 per cent in India's more than Rs 8,000 crore handicraft export.

  ICA asks MP govt to drop proposed VAT hike on mobiles

  Bhopal, July 22, 2009 (PTI):  The Indian Cellular Association (ICA) today demanded that the Madhya Pradesh government drop its proposed plan to increase VAT levy from four to 12.5 per cent on mobile phones, saying any such move will "promote" grey market.
  "The Madhya Pradesh government's plan to increase VAT will result in less legitimate sales and will promote grey channel in the state," ICA national president Pankay Mohindroo told reporters here. He argued that the three-fold hike in VAT would lead to loss of over Rs 95.20 crore in revenue to the State in the next three years, adding that legitimate sale of mobile phones will shrink by almost 90 per cent (Rs 125 crore) from its current value of Rs 1000 crore. 

  Rajasthan slashes sales tax on aviation fuel 

  New Delhi, July 13,2009: Rajasthan, in its latest budget announced on 9 July, said it was reducing taxes to woo airlines to the state. “To attract the airline services to Rajasthan, tax rate on ATF has been reduced from 28% to 4%,” the state government said. The state has three main airports at Jaipur, Jodhpur and Udaipur run by Airports Authority of India. .
  Fuel accounts for over 40% of operating costs at airlines in India and the tax reduction is being hailed by carriers. Airline firms, whose flights touch Rajasthan, could immediately take advantage of reduced spending on fuel while buying aviation turbine fuel (ATF) in the state. Civil aviation minister Praful Patel has said in the past that he will try and persuade state governments to help airlines by reducing taxes on fuel. Some states charge as much as 30% of sales tax on jet fuel. Andhra Pradesh slashed rates on jet fuel to 4% last year. Jharkhand and Chhattisgarh, too, now follow a similar rate. Reduction of sales taxes levied by states has been a long-standing demand of airlines here.

Delhi and Maharashtra has increased VAT to 20% on tobacco products 
   New Delhi, July 13, 2009: The Tobacco Institute of India on Sunday said the decision by the governments of Delhi and Maharashtra to increase the value added tax to 20% on tobacco products may encourage tax-evading tactics leading to revenue loss to the exchequer. The potential revenue loss could be as high as Rs3,000 crore annually, the institute said.
   Recently, Delhi and Maharashtra governments has increased the VAT rates to 20% from 12.5% on tobacco products and according to experts, this may encourage other states to follow the suit. This would also encourage retailers to purchase cigarettes and other tobacco products from wholesale dealers in the neighbouring states and smuggle them in the state without paying taxes.

   Gold duty hike spurs smuggling concerns

   NAGPUR, July 10, 2009: Gold smuggling, a vocation glamorized by Bollywood and one that died a natural death when import duty on gold imports was reduced, may make a comeback. Union budget has now doubled the duty on gold imports to Rs 200 per 10 grams. Traders as well as World Gold Council (WGC)  apprehend that smuggling may take place during festival times when there is a higher demand for the precious metal. The increase in the duty has widened the difference between international and domestic price to around 3 to 3.5%. This could lead to smuggling during periods of additional demand, said a press release issued by the WGC. 
  Traders too said duty would make smuggling of gold profitable, which earlier was not. Without the new duty, a smuggler could make around Rs 250 per 10 grams. This was not worth the risk. Now the margin will go up to Rs 350-375 per 10 grams. From smugglers' point of view, this enhances profit by more than 50%, explained a bullion analyst. The total effect on retail price would be even more because of downstream levies such as value added tax and the octroi. VAT is levied at 1% on the metal. Source: The Times of India 
VAT rate raised from 12.5% to 14% in Rajasthan budget
  JAIPUR, July 9, 2009: Chief minister AshokGehlot — who also has the finance portfolio — dedicated the budget to the common man, farmer and villagers. The budget clearly lays thrust on rural development, social infrastructure, farming sector and BPL families. 
  But this budget is likely to hit you hard, with the VAT rate being raised from 12.5% to a steep 14%. This means most of the stuff that you buy from shops will now cost more. Even eating out will become more expensive. Gehlot, however, made it easier on the pocket to buy property, in a move to boost the flagging real estate market. He proposed reducing the stamp duty from 8% to 5% for men while for women, it has been reduced to 4% from 6%. 

   Govt may extend tax holiday for software firms

   NEW DELHI, July 5, 2008: The Government may extend the tax holiday for software exporters beyond March 2010, in the Budget on Monday. Analysts said extension of tax benefits will be a great relief to the IT sector, which is reeling under the impact of global financial crisis, which has resulted into fewer number of orders and sharp reduction in earnings. Official sources said though the industry has asked for five years of tax exemption, the Finance Ministry may grant it for two years. Currently software-exporting firms enjoy a tax holiday as their units are set up under the Software Technology Parks of India scheme, which entitles them to such a benefit. Major software exporting firms like Wipro, TCS and Infosys earn a major chunk of their revenues from meltdown hit western markets. 
   At present, both service tax and value-added tax (VAT) are levied on customised software and renewing licence to use software. Sources said on the duplication of indirect taxes, there is some possibility of relief where VAT may be the only tax on customised software and renewal of licence to use software. Industry body Assocham said extending tax benefits under the STPI Act is on the cards. - ET

   Maharashtra govt to increase VAT on mobile phones 

   New Delhi, July 01, 2009 (PTI): P:rices of mobile handsets are likely to increase in Maharastra from tomorrow as the state government has hiked the sales tax on devices to 12.5 per cent from four per cent now. The hike in value added tax (VAT), a kind of sales tax, on mobile phones to 12.5 per cent will come into effect from on Wednesday. According to analysts, the tax increase would push up the cost of a Rs 3,000 mobile handset by Rs 250.  The increase in tax would lead to a flourishing grey market and the government would suffer substantial revenue losses, Nokia India Managing Director D Shivakumar said, adding that with the increase in tax, the mobile phones would become costlier in the state. The handset maker, along with apex industry body the Indian Cellular Association (ICA), will meet the Maharashtra government this week to oppose the state's move to raise sales tax on mobile phones. ICA National President Pankaj Mohindroo said, "The move is a 
lose-lose proposition for the government, industry, trade and consumer." 

   Exempt infra projects from excise duty, VAT, CST: Assocham 
   New Delhi June 24, 2009,(PTI) : The government should exempt infrastructure projects from  excise duty, Value Added Tax (VAT) and Central Sales Tax (CST), until they are commissioned, as these levies increase the capital costs of the projects, an industry body has said. On account of continuing levying of excise, VAT and CST on road, port, power and oil projects, the capital cost of the  these become dearer by over 20-25 per cent, thus increasing the burden on developers before the projects are commissioned, 
   Assocham President Sajjan Jindal said.The chamber, in its pre-Budget wish list on the infrastructure 
sector submitted to the Finance Minister Pranab Mukherjee, has also pointed out that the incidence of 10 per cent service tax imposed on the projects during their implementation phase needs to be discontinued, since infrastructure is a priority area for the government. Assocham said burden of service tax, excise, VAT and CST on all projects question their bankability as developers do not get easy access to liquidity as a result it delays their commissioning. The chamber said tax exemption limit for certain savings schemes should be increased from Rs one lakh to Rs two lakh and interest earned on infrastructure bonds covered under this cap.

   Transition from service tax to GST

   June 23, 2009: The current scheme of taxation of services in India is likely to be substantially revised under the much-awaited dual goods and service tax (GST). Services which are at present only taxed at the federal level would be taxed under the GST both at the federal and state level,  resulting in a paradigm shift in the taxation of services. This shift will be with regard to coverage and scope, the manner of charge of the tax, its levy and collection and so on.  At present, what is sought to be taxed is defined in elaborate fashion. As opposed to this, it is likely that under the GST scheme of things, the internationally accepted principle of taxing all services, with a small negative list of services which will either not be taxed or will be exempt from the tax, will be adopted. Thus, all services with the possible exception of essential public services such as education, basic healthcare and public transport could be brought within the ambit of the GST. Indeed, activities which are typically not understood as services at all will also be covered. An example is that of refraining from doing something i.e. contractually choosing to be inactive for a consideration, as is the case with fees paid for non compete. - ET

   ICMA's wishlist for the budget - Vat at 4%, reduction in other taxes

   New Delhi, June 20, 2009: Indian confectionery industry, in its budget proposal, has demanded zero  per cent excise duty on all items of confectionery including sugar confectionery containing cocoa and chocolate products, and chewing gums and bubble gums. The Indian Confectionery Manufacturers Association (ICMA) suggested that the central government should prevail upon the states to lower the VAT
rate on confectionery items at 4%. Confectionery industry, largest among the food processing industries with an annual turnover of around Rs 3,500 crore and with a huge potential to grow as per a study report by Mckenzie, has so far not received any relief in excise duty and continue to remain at the high rate of 16% on all items except sugar confectionery products levied at 8% (candy/toffee), according to M N Rao, secretary, ICMA. 

   UK turns down Indian restaurant industry's VAT demand 

   London, June 19, 2009 (PTI): The Labour government has turned down the demand of the recession-hit Indian restaurant industry to raise the threshold at which small companies pay VAT, spreading gloom among thousands of owners and employees. Buffeted by steep fall in revenues, nearly 150 Indian restaurants that tickled palates across Britain have closed down since last Christmas and many more are likely to shut shop in the next six months.  Owners of Indian restaurants in the east Midlands town of Leicester, which has a large minority of Indian origin, started a campaign at the local and national levels to urge the government to come to their rescue in the same way it had supported failing banks. But in a letter to the campaign organisers, Treasury minister Angela Eagle said: "The Government cannot change the UK VAT registration  threshold without prior agreement with the EU." 

  Modi for VAT implementation across board 

  PATNA, June 15, 2009: Deputy CM Sushil Kumar Modi , along with acting chief justice of the Patna High Court Shiv Kirti Singh, jointly released the two volumes of the book Principles of VAT in India' under the aegis of Bihar Industries Association on Sunday. Both Justice Singh and Modi praised Patna High Court lawyer Prakash Sahay for writing the book. "Taxation is a must, and people should pay it happily," Justice Singh said. Modi said, "S K Singh has won many laurels and even international awards for evolving the system of holding tax. It has been failed in Patna. We will definitely implement it now more efficiently."  Modi appealed to dealers and traders not to protest goods and service tax (GST), which would be operative all over the country from April 1, 2010. He said that GST would introduce a uniform tax regime in the country, and end the numerous taxes charged under the existing "sales tax regime". - The Times of India 

   Biscuit makers want no excise duty, VAT at 4%

   New Delhi June 12, 2009 (PTI): Biscuit manufacturers have sought abolition of excise duty and reduction in value added tax by as much as 4 per cent in the Budget, stating that the product is consumed by common man and also distributed as relief material. In a pre-budget memorandum to the Finance Minister, Indian Biscuit Manufacturers' Association (IBMA) has said that there should be total exemption from excise, irrespective of categories, for biscuits. It also demanded reduction in VAT to  a uniform 4 per cent, maximum. IBMA President B P Agarwal said the government should consider the demand as biscuit is consumed by aam aadmi (common man) and is also a product distributed as relief material during natural calamities. 
   At present, central excise duty on biscuits, cookies and wafers with maximum retail price (MRP) above Rs 100 per kg is eight per cent, while VAT in many states is 12.5 per cent, the industry body pointed out. On cakes, however, the excise duty is levied at four per cent. Besides, Uttar Pradesh has increased VAT to 13.5 per cent from  June 1, 2009 on cakes, cookies and wafers, IBMA said. 
  Biscuit manufacturers have been pleading for reduction in VAT for the past two years pointing that processed food products such as bread, bhujia, namkeen, jam, jellies and fruit juice attract either four per cent or nil VAT.IBMA said small and medium manufacturers consisting about 150 units are facing erosion in their profitability and competitive capability due to the heavy burden of taxation compounded by additional levies in some states. 
   India, world's third largest biscuit producer after the US and  China, produces nearly 19.5 lakh tonnes annually while the size of the sector is estimated at Rs 8,000 crore with 65 per cent of the output coming from the organised sector

   Center govt approves amendment in Punjab VAT Act 

   CHANDIGARH, June 9, 2009: The Ministry of Home Affairs, Government of India has approved the amendment in the Punjab Value Added Tax Act, (as applicable to UT). This amendment will facilitate the implementation of Deemed Assessment Scheme in Union Territory of Chandigarh.  The amendment would help the dealers in getting their pending tax assessment cases cleared through deemed assessment at their own option.  The scheme covers the summary assessment of pending Sales assessment cases prior December 14, 2005 i.e. before VAT came into existence. There was persistent demand by various trade unions,  associations for extending the scheme on the lines of Punjab in UT Chandigarh. The Administration will now initiate the process of framing rules and conditions for the implementation of the scheme at the earliest. In addition to above, there was a lot of hardship faced by Retail outlets of Petroleum products with regard to payment of VAT. In order to remove this hardship, this amendment also allows the collection of VAT on sale of Petroleum products at first stage itself. The exact copy of the notification is also available on the website of  the Administration www.chandigarh.gov.in. 

   VAT hike on handsets by Maharashtra government
   MUMBAI, June 8, 2009: The decision of the Maharashtra government to hike VAT (value-added tax) on mobile handsets could actually result in a drop in the state’s VAT collections, says Indian Cellular Association, the industry body for handset manufacturers. 
   In the state budget, the government last week proposed to increase VAT to 12.5% from 4% on mobile handsets without making the revenue targets from the move public. According to ICA, the proposed hike in VAT will result in handset sales falling in the organised retail sector in Maharashtra. It is currently at 1.25 crore units annually and could reduce to as low as 8 lakh units. With reduced sales, the estimated VAT collection will also be down from Rs 168 crore annually to Rs 33.5 crore, as per ICA estimates. 

  Traders protest VAT on foodgrain 
  Ranchi, June 3, 2009: State trade bodies declared a war on Raj Bhavan following a decision to impose value-added tax (VAT) on foodgrain, potatoes and onions. A four per cent tax was imposed on rice, wheat, flour and pulses apart from potatoes and onions yesterday. To protest against the administration’s move, foodgrain stores across the state has decided to down shutters on June 5 (Friday).
  In an emergency meeting at Ranchi today, Federation of Jharkhand Chamber of Commerce and Industries (FJCCI) called the decision “arbitrary and designed to favour corrupt officials, who would take undue advantage of traders when they register themselves at commercial tax department”. “FJCCI members will also participate in Friday’s march and  hand over a memorandum to Governor Syed Sibtey Razi demanding immediate revocation of VAT on foodgrain,” FJCCI president Anchal Kingar told The Telegraph. He added that if the state does not withdraw the VAT by June 13, shopskeepers would close down again for indefinite period. 
  “The imposition of 4 per cent VAT would fetch the state exchequer Rs 5 crore annually. Bihar has imposed 1 per cent VAT on rice, as it is one of the largest producers, but none of the neighbouring states including Bengal has. Then why did Jharkhand take such a step?” he asked. Worse still, corrupt officials will make hay and that would stifle business and trade opportunities here, he alleged. State BJP also condemned the move and said the tax would lead to rise in prices. Source: The Telegraph
VAT panel to meet Pranab by mid-June on GST
  New Delhi June 3, 2009: Confident of meeting the schedule of introducing the Goods and Service Tax in the beginning of the next fiscal, state finance ministers will meet the Finance Minister Pranab Mukherjee 
around mid-June on various issues relating to the new tax system. "I am very happy to know that the Union Finance Minister would be having interactions with state finance ministers on many matters, including GST, and so it will be in the middle of this month we will have the meeting on the GST," VAT panel Chairman Asim Dasgupta said here. He exuded confidence that GST would be introduced in the 
beginning of the next fiscal, as scheduled. 
  "As you know, the scheduled target date for introduction of GST is April one 2010 and we want to stick to it," Dasgupta, who is West Bengal's Finance Minister, said. When asked whether he is hopeful of meeting the deadline of April one, 2010, he said,"of course."   Right now, only broad structure of GST, which would replace excise duty, service tax at the Central level and VAT at the state level has been agreed upon between the Union Government and states. It has been agreed that the new tax system would have two structures, one at the state level and another at the Centre. - PTI
Appeals under VAT, CST to be heard in city now 
  Ludhiana, May 29,2009: All the first appeals under the Value Addition Tax (VAT) and Central Sales Tax 
(CST), to be decided at the level of Deputy Excise and Taxation Commissioner, which are filed by the dealers or appellant of Ludhiana will now be heard in Ludhiana itself. Such type of arrangement may also be made for other districts of the state as well.  According to Ashok Juneja, Chairman, and B R Kaushal, General Secretary, Punjab Tax Bar Association (PTBA), the said issue was decided by A Veenu Parsad, Excise and Taxation Commissioner (ETC), Punjab, on the plea of PTBA, which met him with the suggestions for smoothening the working of department. Finance Secretary (PTBA) said the move would provide relief to those tax professionals, dealers, traders and industrialists who had to run to other cities and districts where these cases were fixed, Besides the cost of litigation will also come down. 

  ICAI urges TN govt to make VAT auditing compulsory 
  COIMBATORE, May 27, 2009: Institute of Chartered Accountants of India (ICAI) would submit a representation to Tamil Nadu Government to make VAT Auditing compulsory in the State. By compulsory auditing of VAT, as in Maharashtra, the Government would have lot of advanta ges, including identifying the revenue leakage, said Mr G Ramaswamy, General Council member. The institute was now focusing on preparing its members to comply and be thorough with the proposed Goods and Service Tax, which would be in place by next year, by merging VAT and Service Tax, he said. To update the CA's in different topics, a two-day Al l India Conference is being organised here from May 29, in which about 1,000 members and students are expected to participate. – PTI 
  Govt to work on GST structure
  May 25, 2009: The Congress-led UPA government has just 10 months to usher in a new  goods and services tax (GST) regime to create a seamless common market across the country. Consumers will pay a single rate of tax on goods and services sold across India, if the government introduces the levy from April 1, 2010. Work is in progress, with the empowered committee (EC) of state finance ministers scripting a model and roadmap for GST in India. 
  The EC has recommended a GST with a central and state component. And the Congress manifesto refers to a “moderate” goods and services tax, saying once GST is implemented, all other state- and central-level indirect taxes, including VAT, excise duty, service tax, luxury tax and so on will stand abolished. Customs duty will be out of GST and is likely to be replaced by VAT on imports. “A clear structure of GST needs to be in place in the first 100 days,” said TR Rustagi, former joint secretary in the finance ministry. Echoing a similar view, S Madhavan, executive director, PricewaterhouseCoopers, says the government should set a clear  timeline and declare a model GST. Four years ago, states switched over to the VAT system, which has bolstered their revenues and improved compliance. Goods attract a 4% or 12.5% state VAT, while excise duty is 8% for most commodities. Services are taxed at 10%.  
IIA protests against turnover limit for tenders
  KANPUR, May 23, 2009: The members of Indian Industries Association have protested against the government decision of inviting tenders for Madhyanchal Vidyut Vitaran Nigam from only those who have had a turnover of Rs 25 crore in the last three years. IIA delegation led by its president (elect) Anil Gupta met chairman UPPCL and principal secretary SSI government of UP in this regard. 
  IIA further says that VAT rates on several items which otherwise are industrial inputs/equipments and machinery are higher than other states. A case in point is transformers that are taxed at 12.5% here whereas it is 4% in other states. 

  Worst seems to be over for handicrafts exports 
  New Delhi, May 21, 2009 (PTI): Deceleration in Indian handicrafts exports seems to be bottoming out, as shipments in April dropped at a lower pace than in March last fiscal. Handicrafts exports dipped 22 per cent to $154.78 million in April year-on-year against a whopping 71.8 per cent decline posted in March.   As demand for items like metal-ware, imitation jewellery, wooden items and wall hangings came down in the recession-hit western stores, their exports from India contracted by a massive 48 per cent in the 2008-09 fiscal.  However, the situation seems to be improving as the pace of decline is not as sharp as it was in the last fiscal. "We have been able to arrest the dip in exports to a certain extent and we are hoping that the scenario will only get better from now on," Export Promotion Council for Handicrafts (EPCH) Chairman R K Malhotra told PTI. 
  The newly-elected EPCH chairman said the government's initiatives  like interest subvention did help the exporters. The sector, which employs close to one million people, has lost about five lakh jobs in the last one year. Artisans in handicrafts clusters of Moradabad, Jaipur, Shararanpur, Jodhpur and Narsapur have suffered job losses in large number. "We plan to take up with the Government issues like duty exemption on import of machines, exemption from income tax and service tax, expediting the process of VAT refund and abolition of fringe benefit tax," Mr. Malhotra said.   Indian handicrafts have major markets in the US, UK, Germany, Italy and Saudi Arabia. Moradabad (Uttar Pradesh) is a major exporting hub of art metal wares and imitation jewellery, while Saharanpur and Jodhpur are famous for wooden, wrought iron and sea shell handicrafts. Lace and lace goods are made at Narsapur in Andhra Pradesh. 

  Exporters seek IT exemption for three years from new govt

  Coimbatore May 17, 2009: Knitwear garment exporters today said that they should be exempted from the purview of income tax by the new Government coming up at the Centre for three years, so that it would help to reduce the prices and the 'competitiveness' could be increased.   Welcoming the results of the Lok Sabha polls, Tirupur Exporters' Association (TEA) president A Shaktivel said in a statement that knitwear exporters have been facing crises in the export market and they were efforts to cut down the costs to sustain in the global market.He said TEA wanted a level playing field to compete with China, Vietnam and Bangla Desh, since they have increased the refund of VAT by 15 per cent to 17 per cent, as one of the supporting measures to exporters, to bail out from global crisis.
   By taking into consideration of this, Duty Drawback rates and Duty Entitlement Pass Book have to be increased by five per cent, he said. The exporters should also be exempted from Fringe Benefit Tax, he said.  - Press Trust of India  

  India's Finance Ministry To Resolve Issues Of Double-Taxation 
  May 5, 2009: India's Finance Ministry is to meet representatives of the packaged software industry to settle the issue of double- taxation on the sector, reports PTI, quoting a Finance Ministry official. He said that the representatives would put forth their suggestions and the ministry would work out a solution. The software industry is under pressure due to rising costs, partly because of double- taxation--service tax as a service and excise duty as a good. The government feels that there should be only one federal tax levied on a good or service, the official said. But when software is downloaded, it attracts service tax with downloading treated as a service and faces duty when a licence for the software is obtained, as it is a good.  Vinnie Mehta of the Manufacturers Association of Information Technology (MAIT) said that in all there would be three taxes, the service tax, excise duty at Union level and state taxes like VAT, which have to be paid by manufacturers. Packaged software refers to a bunch of software offered to vario us PC marketing companies to come pre-loaded on branded computers.

Electric vehicle makers seek 25% govt subsidy
  New Delh, May 4, 2009:: After getting off to a promising start, electric vehicle makers are finding it increasingly difficult to expand sales in a slowing economy and have approached the government for a helping hand. The domestic industry has asked the government to “give at least 25% subsidy on purchase of all electric vehicles for two-three years so as to seed the market and to ensure that the concept sinks in (in) the minds of the consumer.”
  Value added tax (VAT) is another point of contention. The industry has asked this to be reduced to 4% from 12.5%. In states such as Madhya Pradesh, Kerala, Gujarat and West Bengal where VAT rates have been brought down to 4% sales have increased substantially, said Gill. Delhi has also subsidized sales by giving buyers a 15% rebate on the price of the vehicle. The vast majority of the electric scooters sold in India last year were imported. The industry contends that low volumes and the present duty structure make manufacturing unviable. Imported completely built-up units are charged 14.7% whereas the duty for parts is 24.2%.

  e-scooter market set to touch Rs 500 cr sought uniform VAT

  Chennai April 29, 2009: Society of Electric Vehicles Manufacturers secretary and BSA Motors vice- president KB Srinivasan said in 2008-09, the industry was worth Rs 400 crore or around 110,000 units. At present, 80 per cent of e-scooters sales are from Tier II and III cities, while metros contribute 10-15 per cent.The Society of Electric Vehicles Manufacturers, representing 32 electronic scooter and car manufacturers, was formed three months ago to increase penetration and create awareness.
  The society has urged the government to frame a regulation for the e-scooter industry, which would control the unorganised sector. “Predominantly the e-scooter market was controlled by the unorganised sector, which had a market share of 50 per cent till last year. After big corporate started manufacturing and selling, it has come down to 30 per cent,”  he said. The industry would focus on research and development, he said,  adding in 2008-09 the top four companies invested over Rs 100 crore in R&D.
  The association is also seeking waiver of 8 per cent excise duty on e-scooters, which are manufactured locally. Srinivasan said currently there was no duty on imported finished e-scooters. This has led the unorganised sector to import vehicles. It has also sought uniform VAT, road tax and a subsidy policy for e-scooters. Some of the major e-scooter manufacturers include BSA, TVS, Kinetic, Indus Elec-Trans and Hero Ulta. The top six players account for 60 per cent of the e-scooter market. - Business Standard

  Online tax payment facility for traders 

  Thiruvananthapuram, 28 April 2009: Kerala Finance Minister T.M. Thomas Isaac has said that, E-payment facility is being introduced in the Department of Commercial Taxes from July. In a press release, he said the e-payment system for remitting taxes would become compulsory for all traders from September. State Bank of India and its associate banks would offer the facility. These banks would permit the traders to open zero balance accounts for this. Bank charges and collection charges would not be levied on the e-paid tax.
  The department had introduced an e-filing system for the traders to submit their tax returns in January 2008. Those remitting presumptive tax could e-file their returns for the current financial year till the end of April. Out of 1,37,372 traders who have VAT registrations in the State, 98,683 have already joined the e-filing system to submit their tax returns.
  “Kerala is the first State in the country to introduce this system. The e-payment facility is also being introduced here to ensure that the traders received the full benefits of the system for e-filing of returns,” the press release said, quoting Dr. Isaac. He promised the traders that the government would consider their demand for advancing the deadline for e-filing their returns. - Kerala online - News

  IT industry sales down by 40% due to recession and VAT
  PANAJI, April 27, 2009: The new president of the Goa IT Business Association (GIBA), Prashant Kuncolienkar, has said that recession has seen the IT industry's fortunes in Goa sliding down by almost 40%. "There has been a downturn of almost 40% in our turnover. IT products today are consumer items and not a lifestyle item," Kuncolienkar said, adding that GIBA will ask the government to step in and lower excise and custom duties. 
  "Another factor that has been pushing up the prices of IT products in Goa, as compared to other states, is the difference in taxation policies," the GIBA president said. IT dealers in the state are a miffed lot after the last budget of the state government. Their grievance is that while other IT products carry a 4% VAT, the government excluded the all-in-one (AIO) printer from its list of IT products, and brought it on par with other commercial products, which means these machines are levied with a 12.5% VAT. An AIO printer is a device which functions as a printer, scanner and a copier.  Kuncolienkar says that GIBA will pursue the matter further with the chief minister, the VAT empowerment committee in New Delhi, the finance department and the sales tax commissioner. "This is only in Goa. Everywhere in India, AIO printers are available with a 4%VAT, but it is the customers who are ultimately paying the price for it. "Now that the AIO printers carry a 12.5% VAT, the dealers are themselves buying these products at a price that is higher than the MRP. This results in the item being sold to the customer at a price higher than the MRP. How can any goods be sold for a price higher than the MRP? Customers have the right to go to consumer courts to complain," an IT dealer said. Source: The Times of India
  Uttarakhand to earn Rs 200 crore from Nano through 12% VAT
  Pantnagar, March 19, 2009:  Expectations are growing in Uttarakhand that Tata Motors may sell a majority of its small cars from the state only. This follows a letter from the Uttarakhand government asking the auto major to sell a majority of the Nano cars through its new subsidiary, Tata Motors Distribution Co Limited, which was recently floated at Pantnagar. Through the sale of the Nano cars and other commercial vehicles which are being manufactured at Pantnagar, the state government is hoping to earn additional tax collections of Rs 100 crore (Rs 1 billion) to Rs 200 crore (Rs 2 billion) through a 12 percent VAT.

  VAT tariff is likely to harmonised with HSN
  New Delhi March 16, 2009: It has come to be known from an official source during a recent seminar that the Empowered Committee of Finance Ministers of States has got the VAT tariff worked out and is on the way to finalising the details on the same pattern as in the Harmonized System of Nomenclature (HSN) also known as Brussels Trade Nomenclature (BTN).

  National tax conference

  VARANASI, March 8, 2009: The All-India Federation of Tax Practitioners (North Zone) is going to organize a two-day national tax conference on 'role of tax professionals in the global economic scenario' from Saturday. Giving details of the programme at a press conference on Friday, Bharatji Agrawal, national president, AIFTP, said it would witness conversations, discussions and deliberations on different tax issues pertaining to direct and indirect tax laws in the country. "There are as many as six technical sessions, covering some of the important topics under income tax, value added tax (VAT) and service 
tax," he added.  Over 700 participants, including tax professionals from various parts of the country, are expected to participate in the programme that would be inaugurated by Justice Dalveer Bharti, judge, Supreme Court of India. Source: The Times of India 

  West Bengal realtors appeal to govt on price slash

  KOLKATA, March 5, 2009: Realtors in Bengal have urged state urban development minister Asok Bhattacharya to take the lead from Centre's  recommendations on affordable housing and devise a state-specific policy. Bengal chapter of Confederation of Real Estate Developers'  Association of India (CREDAI) president Pradeep Sureka said serious attempts were on to address the needs of families by offering more housing products in the sub-Rs 25 lakh category.  PS Group director Pradeep Chopra said CREDAI Bengal had also sought a reduction in stamp duty from 8% to 2% and lowering of VAT on building material for this category of housing. Hudco executive director D Subrahmanyam had earlier requested Credai to convince the Bengal government on the need to scrap the antiquated Urban Land (Ceiling Regulation) Act and Rent Control Act.

  Hindustan zinc cuts silver rates 

  New Delhi, March 03, 2009 (PTI): Vedanta Resources group firm Hindustan Zinc on Tuesday said it has cut prices of silver by Rs 460 to Rs 22,460 a kg. "The price revision is effective from today," a company circular said, adding that the prices are exclusive of sales tax/VAT, other statutory levies as applicable. 
Chandigarh Excise Policy 2009-2010 
  Chandigarh, March 02, 2009: The Administration has approved the Excise Policy for 2009-10 with the same objective of ensuring the supply of quality liquor at remunerative rates. There will be no change in the number of Country Liquor vends and their quota. There has been no increase in the rate of Excise duty on liquor. However, in order to ensure balance in the regional trade and to curb the outflow of liquor to neighboring States, the rate of VAT on liquor has been increased from 4% to 12.5%, bringing it at par with Punjab and Himachal Pradesh. Since the VAT on liquor is leviable at first stage, the effect on the retail sale of liquor will be only 5-6 % and the liquor will continue to be available at reasonable rates. 

  Pranab Mukherjee unveils fiscal stimulus -3

  New Delhi February 25, 2009: Finance Minister Pranab Mukherjee today announced a stimulus package for the economy, the third this financial year, cutting excise duty and service tax two percentage points each, effective midnight, and extending previous excise cuts beyond March 31, 2009.  Service tax has been cut across the board from 12 per cent to 10 per cent and the excise has been reduced by the same margin only for items that currently attract the 10 per cent rate. Consumers are expected to benefit significantly from this latest cut in indirect tax, since over 90 per cent of excise  duty collections come from the 10 per cent slab rate, which is levied on white goods, metals, commercial vehicles, iron and steel and cement. Tyre makers have already responded by announcing a two percentage point cut in prices.  Overall, consumers can expect a more than 2 per cent reduction in retail prices if the excise and service tax cuts are passed on fully. This is because the Value-Added Tax (VAT), which is levied at the state level, is applied over and above the excise duty, said Vivek Mishra, partner, Ernst & Young, an auditing and consulting firm. Most items attract 4 per cent or 12.5 per cent VAT rates. At 12.5 per cent, a two percentage cut in indirect tax will lead to a 2.3 per cent reduction in retail prices. -: Business Standard

  FICCI initiative to include entertainment tax in GST 

  MUMBAI, February 18, 2009: The Central Government will take up with the Empowered Committee on VAT (Value Added Tax) the media and entertainment industry’s demand for subsuming entertainment tax in the Goods and Services Tax (GST), which is slated for introduction from April 2010, Minister of State for Information and Broadcasting and External Affairs Anand Sharma said here on Tuesday.Global convention Speaking to the media on the sidelines of the Federation of Indian Chambers of Commerce and Industry (FICCI) Frames 2009, the 10th edition of the global convention on business of entertainment, Mr. Sharma said, “We will consider the entertainment industry’s demand, articulated by FICCI, for inclusion of entertainment tax in GST itself, so that there is single tax on the industry.”  Mr. Sharma said, a regulatory framework from the technology point of view, like the one for the telecom industry, was under discussion and a decision was expected soon. Source: The Hindu
Mr.Modi urged the Centre to provide incentives to the jewellery trade
  CHENNAI, February 17, 2009: Gujarat Chief Minister Narendra Modi on Monday charged the Central government with remaining indifferent to his appeals to help the diamond industry in his State. Mr. Modi said his government had removed the VAT on diamonds, in order to help the industry. Though he urged the Centre to provide incentives to the jewellery trade, there was no response. 
  In view of the present economic conditions, he said, rough diamonds could be purchased at a low cost. 
Once the conditions improved, the processed diamond could be sold in the open market. This would fetch enormous amounts and wastage would be avoided. (According to the Gem and Jewellery Export Promotion Council, Surat alone accounts for 5 lakh-6 lakh diamond cutters and polishers, representing 60% of the total workforce in the country. Of the total exports of $21 billion achieved by the country’s gem and jewellery industry in 2007-08, polished and cut diamonds accounted for $14.2 billion.) 

  Online tax payment in Goa from February 12, 2009 

   PANAJI, February 11, 2009: All the commercial taxes in Goa can be paid online with state government planning to launch 'Cyber Treasury', an e-governance initiative on February 12. The 'Cyber Treasury' would be launched by Goa Chief Minister Mr Digamber Kamat on the sideli nes of 12th National conference on E-Governance to be held on February 12 and 13. “Beginning with Value Added Tax (VAT), all the taxes could be paid online by the consumers under this scheme,'' said Mr Udipta Ray, state finance secretary. 
The government has tied up with the State Bank of India (SBI) for the launching of this scheme. “Subsequently, other accredited banks will also be joining in the scheme,'' he added. The scheme, currently covers, VAT while state government plans to cover 32 vital services under e-governance in Goa, Ray disclosed. – PTI 
4 percent VAT imposed on domestic chemical products
  CHANDIGARH, February 03, 2009 : The Cabinet on Tuesday which met under the Chairmanship if Chief Minister Parkash Singh Badal approved to levy Value Added Tax (VAT) @ 4% on mosquito repellants, toilet cleaners, wood preservatives, chemicals for killing domestic insects, termicides, phenyle and similar other products which are not used for agriculture purpose. This decision would enable the government to earn revenue of Rs. 10 crore annually. 

  HRA appeals to exempt members from luxury tax, VAT 

  Mumbai, January 30, 2009 (PTI): The HRA has appealed to the Maharashtra government to exempt its members from luxury tax, VAT and electricity charges for at least two years in the forthcoming budget as the hospitality industry has been badly affected due to recession and 26/11 terror attacks. Government aid will help the industry to cater to its clientele. The hospitality industry has been badly hit after the Mumbai terror attacks, Hotel and Restaurant Association (Western Region) President S P Jain told reporters here on Thursday. 
  Number of foreign tourists visiting India and particularly Mumbai has considerably come down and the occupancy percentage in various hotels has also reduced drastically, Jain said. Nearly 100 restaurants have closed down in Mumbai alone due to the high impact of VAT charges, he said. 

Rajasthan slaps 20% VAT on Liquor and beer 
  JAIPUR, January 28, 2009: In a massive change in the state's excise policy, the cabinet on Tuesday not only decided to increase the licence fee for bars but also proposed a 20% VAT on all India Made Foreign Liquor and beer, up from 12.5% at present. The cabinet also decided to close about 800 shops selling IMFL in the state. The move, the government said, is aimed at pacifying a growing number of people who had been protesting against the opening of liquor shops.
  It has also included the death anniversary of Mahatma Gandhi on January 30 in the list of dry days, taking the total number of such days from four to five in a year. In its show of concern for the poor and those engaged in distilling illicit liquor, the government will now keep aside 1% of the excise revenue, Rs 22 crore -- for their rehabilitation and treatment. 
Rajasthan truckers to meet Gehlot over VAT on diesel 
 Jaipur, January 8,2009: Striking Rajasthan transporters today asked state authorities to reduce VAT on diesel and bring the fuel price on par with what was prevailing in Delhi, Punjab and Haryana. "We have sought a meeting with Chief Minister Ashok Gehlot this evening to put forward our demands,"Ved Bhushan Sethi, President of Rajasthan Truck Transport Operator Union, said here.
  Sethi said that there was a difference of Rs 4-5 in the VAT on diesel when compared to neighbouring states of Haryana, Punjab and Delhi. Rajasthan has been charging 28 per cent VAT on diesel used in trucks for the last five years as against the national average of 4 per cent, he said. The Union has also apprised state Transport Commissioner J C Mohanti on the ten-point charter of demands, which includes slashing of diesel prices by ten rupees and parity in VAT on diesel, he said. Source: PTI

  HC quashes penalty provision in VAT Act 

  Bangalore, January 7, 2009: In a major relief to dealers, the Karnataka High Court  has struck down section 72 (1) of Karnataka VAT Act, 2003, as unconstitutional and unreasonable. Allowing a batch of petitions filed by Philips Electronics India Limited and others, Justice D V Shylendra Kumar has said that frequent tinkering in the said Act shows that there is lack of clarity in the legislative policy. Levy of penalty on tax liability is nothing but tax on tax. The court has ordered the authorities to refund the penalty collected so far under the said provision.
  The complainant challenged the provision which enabled the authorities to impose penalty at the rate of 10% of the value added tax payable in addition to a daily penalty of Rs 50 and interest of 1.25% if there is delay of even one day in furnishing the monthly tax returns. It termed this provision as oppressive and unreasonable. 
  "The huge penalty on smaller dealers and small liability of tax assumes gigantic proportions when the delay is 3-5 years as seen in some cases. A penalty based on extent of delay which sometimes exceeds the liability is grossly disproportionate. An arbitrary penalty which is also an irrational levy automatically loses nexus achieving the object of correcting mischief sought to be prevented by the legislation and therefore renders itself as unconstitutional. Any penalty should be in reasonable limits to act as sufficient and mere deterrent and not reaching level of confiscation," the judge has observed. 
Source: The Times of India 

  Transport union calls nationwide strike from Jan 5 

  Mumbai, January 04, 2009 (PTI): Transporters today gave a call for an indefinite nationwide strike from January 5, 2009 to press for their demands, including reduction in diesel prices. The strike call has been given by All India Motor Transport Congress (AIMTC), to which the entire road transport community comprising 4,000 associations are affiliated.The transporters are demanding reduction in diesel price by Rs 10 per liter and uniform 4 per cent VAT on the fuel among other things. 

  Filing of VAT returns set to go online from mid-January
  CHANDIGARH, January 03, 2008: From mid-January onwards, thousands of dealers in Union territory of Chandigarh would get the additional facility to file their individual VAT returns online. The UT excise and taxation department is busy finalising a software to facilitate shopkeepers and traders file their VAT returns while sitting at their homes. Disclosing this to The Times of India, additional excise and taxation commissioner of UT, Manjeet Singh Brar, stated that with this facility, traders and shopkeepers would not have to go to concerned office and stand in long queues to file the VAT returns. They can just visit the related website and file the return in a simple and easy way with a mouse click.   Six months back, the department, on the demand of traders, had made arrangements for filing their returns at city's e-Sampark centres. But there too, the traders had to stand in queues, wasting their precious business time, sources said. To start with, Brar said, they would ask the traders to deposit the return amounts in designated banks and forward a soft copy of the same to the department for their records. Gradually, the department would begin accepting VAT returns from shopkeepers and traders online saving their time, Brar said. Source: The Times of India   


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