CoCommercial tax collections to post 20% growth in AP

Collections rise despite fears of shortfall in targets due to bifurcation issues

Commercial tax collections in Andhra Pradesh is likely to register a 20 per cent growth, grossing Rs 50,000 crore to the state exchequer in the financial year ending March 31, 2014, a top official of the department said on Tuesday.

“In contrast to the general perception that the department might not be able to achieve the targets owing to bifurcation issues, the collections infact grew 20 per cent over that of the last financial year,” Hiralal Samaria, commissioner, commercial taxes, said on the sidelines of a meeting with businessmen on Tuesday.

The commercial tax receipts from close to 70 per cent of the state’s own tax receipts of Rs 72,442 crore were projected for the current year. The growth in VAT receipts was driven by petroleum products, liquor among other things, Samaria said.

There were also reports that the  higher growth in commercial taxes this time around was also due to a policy change under which the government had brought the margins of AP Beverages Corporation that sells liquor to the retail shops, into the tax format in a bid to avoid paying Income Tax on it.

While 85 per cent of these taxes were collected in Telangana region on an accrual basis ( place of tax remission) the consumption-based contribution from Telangana and Seemandhra is expected to be in the range of  53 per cent and 47 per cent respectively.  

The department, however,  proposed to distribute all the revenues collected up to June 1 in proportion of the population of respective regions-little over 42 per cent in Telangana and little under 58 per cent in Seemandhra.

Revenues received from June 2 will go to the accounts of new states as the separate treasuries and separate consolidated fund for both the states will come into operation from the mid night of June 2, according to finance department officials.

There are 2.85 lakh dealers registered with the commercial tax department in the existing state. All the existing TIN numbers issued to the dealers will only work for the residuary state of Andhra Pradesh and new TIN numbers, roughly numbering 2 lakh, will be issued to those who operate in Telangana before the appointed date, according to department officials.

The department has Rs 12,000 crore arrears to be collected from the dealers while it is to pay Rs 500 crore in refund to the dealers.  The two new states are expected to enter  an memorandum of understanding(MoU) to continue the tax breaks currently granted to various industries in the two regions that would become two states from June, 2, 2014.