24% Increase in post vat collection in uttar pradesh tax exemptions to continue

July 4, 2008, New Delhi – Post VAT, the tax collection in Uttar Pradesh for the first quarter (April –June) has increased by 24 % and it’s targeted at Rs 19,556 crores during this financial year.  This was disclosed by Mr.Govindan Nair, Principal Secretary, Institutional Finance, Commercial Taxes and Registration, UP while addressing an interactive session organized by PHD Chamber today in Delhi. According to Mr Nair, this is a substantial part of the development fund at the disposal of the State for undertaking various development measures. He wanted the trade and industry to take cognizance of this vital factor and extend their support to the Government for realizing its development needs. He underscored the fact that tax collections during the VAT regime were better compared to the non-VAT regime.

He also said that a comprehensive Bill to amend the UP Trade Tax Act will be introduced in the Assembly shortly and it would be, hopefully, passed in two to three months time. The Bill would seek to redress some of the difficulties being faced in the implementation of the present VAT structure.

He mentioned that changes in the framework of  VAT is an ongoing  process and told the trade and industry to bring to the notice of the Government glitches in the implementation of the VAT from time to time. The intention of the Government was to bring the Bill through Ordinance route for immediate implementation and it was only at the instance of the Governor that it was decided to introduce that as a Bill, which might take two or three months for its passage, he added.

Mr. Nair assured that the Government was committed to continuation of the exemption schemes under Section 4A of the UP Trade Tax Act. A provision to that effect is contained in the amendments to the Bill, which has already been finalized. The industry representatives pointed out that it was not in the larger interest of the country that the exemptions be converted into deferment. Other states like Maharastra, Karnataka, Gujarat, Tamil Nadu etc have allowed the exemption for the unexpired period. They also pointed out that West Bengal was still granting exemptions to new units even after the implementation of VAT.

To a specific suggestion from the floor that the EOUs should not be taxed, Mr. Nair observed that the Government was committed to refund the tax collected from such units. For this purpose, the process of refunds would be streamlined as also the treasury operations involving refunds. He however maintained that tax exemption of such units might not be possible since that was not in line with the VAT guidelines. 

On pointing out that entry tax still continued to be a major irritant, Mr. Nair pointed out that it was levied on select items and would be replaced with GST. Trade and industry representatives pointed out that there was a good case for the abolition of the entry tax since the tax amount collected through it was very negligible. He also said that the Government effective from 1st August 2008 would reduce the number of check posts. There would be changes in the Form 38, which has to be filled up at the check posts. He called up on the trade and industry to submit the Form in the stipulated time and comply with the rules and regulations prescribed in it. He also mentioned that the Stamp Duty has been substantially reduced in the State and urged the trade and industry to register the transactions and mortgages.

On the issue of evasion of VAT on imported (Chinese) bus/truck tyres, Mr. Nair disclosed that he had alerted the concerned Department to look into it and to take corrective action at the earliest. He also pointed out that the UP Administration was embarking on a massive system of e-payment of taxes and called upon the businessmen to take advantage of the facilities to streamline the process of tax payment.

The others who spoke at the meeting included  Mr. Ashok Kajaria, Vice President, PHD Chamber and Mr. Sishir Jaipuria, Chairman, UP Committee of PHD Chamber.