Southern States - Kerala-Thiruvananthapuram   

Minister agrees to amendments to VAT Bill

By Our Special Correspondent

THIRUVANANTHAPURAM Feb. 26. The Finance Minister, K Sankaranarayanan, has announced several amendments to the Kerala Value Added Sales Taxes Bill, seeking to provide sops to small traders, hotels, works contracts, small farmers, plant and machinery for industrial units, and exporters.

Referring to the amendments brought in at the Subject Committee stage, Mr. Sankaranarayanan, replying to the debate on the bill as reported by the committee, said that VAT would not be applicable to farmers other than institutions registered under the Companies Act and Partnership Act in order ensure that small and medium farmers continued to enjoy the benefits they are getting at present.

He said that as part of the attempt to simplify tax procedures for small traders with a turnover of Rs. 2 lakhs and Rs. 20 lakhs, it had been proposed to levy a 2 per cent tax. Raw materials for industry would attract only 4 per cent tax, while compounding system would be introduced for works contractors, metal crushing, lotteries, hotels other than bar and star hotels. Similarly, industrial units purchasing plant and machinery would be eligible for concessions in stages.

Tax reimbursement would be allowed to raw materials purchased for exports. He said that units which enjoy tax exemption would be allowed sops in tune with the VAT.

The Finance Minister said that the Government was ready to come up with corrective measures while implementing the VAT act. Whatever be the lapses or shortcomings, the Government would not hesitate to bring in suitable amendments for the benefit of common man.

He said that the Centre had promised to compensate for the loss of revenue consequent to the introduction of the VAT system.

Mr. Sankaranarayanan said he had held a series of 65 discussions with traders and their organisations, tax practitioners, and chartered accountants.

He said that there were several shortcomings in the existing Sales Tax act, including the wide range of rates, complicated mechanism, several hidden concessions and exemptions. The differential tax regimes among the States was also a major hurdle. Once VAT is introduced in all the States, there would be a uniform tax system for the entire country he said.

He said that under the VAT system, there would be five basic tax rates at 0 per cent, 1 per cent, 4 per cent, 12.5 per cent and 20 per cent.

He said that essential commodities sued by the common man, raw materials would come under the zero tax regime in the first schedule.

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