MP traders will have to disclose purchase details in VAT returns

But they will have the option of using the old tax return forms instead of filing returns electronically

Traders in Madhya Pradesh will now have to disclose details of the purchases they make in each quarter in their tax returns. The state government will soon issue a notification to this effect.

The traders, however, will be allowed to use either the old tax return forms or file their returns electronically, and needn't furnish purchases made from bulk dealers. They may also skip mentioning items that form part of defined schedules.

Traders recently threatened to go on strike if the state government did not withdraw mandatory provisions of furnishing details of each purchase in invoice form and categorise all the items in accordance with the defined schedule and part.

"Most traders demand ITR (Input tax rebate) and claim it. But they skip giving details of the bulk dealer from whom they purchase various items. Since Madhya Pradesh commercial tax department assessment system is not fully computerized, it is found that traders reclaim the ITR but the dealer from whom they purchase is fake or does not exist. Sometimes it becomes difficult to trace all the dealers from the purchase has been made," said a government insider.

The state government is coming up with a notification soon in this regard, a senior government official said.

State tax machinery in states like Gujarat, Chhattisgarh and Kerala already demand details of purchase and bulk dealer including TIN (Tax Index Number) to trace the bulk dealer and ascertain if he has paid the tax.

Madhya Pradesh though is well within tax collection (entry tax, value added tax and central sales tax) target this year at Rs 19,706 crore against targeted Rs 19,470 crore. But apprehensions of authorities put the figure of false ITR at an equally whopping amount.