Date:31/12/2004 URL: http://www.thehindubusinessline.com/2004/12/31/stories/2004123101361700.htm

Back AP:Industry, trade seek clarification on VAT

Our Bureau

Hyderabad , Dec. 30

EVEN as Andhra Pradesh is contemplating an Ordinance next month to implement VAT (value-added-tax), the industry and business community want the Government to clear the air in regard to some areas that need clarification.

The representatives of industry and trade gave vent to their feelings on the new tax regime at a State-level meeting on draft VAT Act and rules organised by the Government here on Thursday.

The Government, which is planning to implement the VAT Act from April 1, convened the meeting to solicit industry views on the upcoming tax regime. It planned to incorporate some of the changes when it finalised the Act.

Addressing the gathering, Mr O.P. Goenka, President of the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI), said it was essential that any changeover to a new system of taxation must be well thought, well considered and well implementable.

VAT, the most transparent system of taxation world over, must be brought in a transparent way. Anything less than that would undermine the very basis and system of VAT, he felt.

Stating that FAPCCI has been in the forefront in advocating VAT for the State for a decade, Mr Goenka said there were a number of areas where dealers needed clarifications.

The Chamber is organising a meeting on January 8 to discuss VAT. Based on the proceedings, it would submit a note to the Government, suggesting changes to the draft Act.

Mr Ramesh Datla, Chairman of CII (AP), said the country was late on embracing VAT that already covered 70 per cent of the global population in 120 countries.

He said the Act should keep the World Trade Organisation's (WTO) norms in mind while taxing electronic goods. About 80 per cent of electronic goods would come under WTO duty-free regime. Charging four per cent under the Act would not help the industry, he felt.

He also wanted the Government to spell out clearly on phasing out of Central Sales Tax. "No timeframe has been indicated on its phasing out," he commented.

There was no clear-cut definition of services too. "The draft Act needs to expand the definition of business to include services. It should also be specific on the definition of capital goods," he said.

Mr Datla said the definition of `goods carrier' should include rail as well.

Earlier addressing the gathering, the Commercial Taxes Minister, Mr Konathala Ramakrishna, said there were fears among the traders that the new Act would be more beneficial to the industry rather than the trade.

He said it would be more transparent unlike the AP General Sales Tax Act that had provided the officials with discretionary powers leading to harassment.

Asking the officials to play the role of facilitator, the Minister said that nearly three lakh assessees would not come under the purview of the VAT Act.