Slowdown shadow on VAT collection

The empowered committee of state finance ministers have expressed concern that the rate of VAT collection might be impacted in the next six months of the current fiscal year due to economic slowdown. However, the panel, which met here today, said that currently there is no such impact on the rate of VAT collection in states, which up to September has been 23.43 per cent higher than the corresponding period last year.

“We are concerned about the possible impact of recession on the rate of VAT collection in the next six months. We expect that the sectors which mainly affect the rate of collection are steel and cement,” said West Bengal Finance Minister Asim Dasgupta, who is also the chairman of the Empowered Committee of Finance Ministers.

On other issues discussed at the meeting, he added that the empowered panel has suggested Union Finance Minister P Chidambram that the goods and services tax (GST) should be levied, which is collected by the central government through central GST and simultaneously through the state GST. The structure should be simple for state and central GST and the rate should be same for the good and services and further the rate should be few in number.

He added that the rate is being worked out and would be completed by this financial year. He also said that the finance ministers of different states expressed their concern over the impact of the Sixth Pay Commission.

“We have demanded that 50 per cent of the additional pay burden should be borne by the Centre.” On being asked what would be the Centre share’s after revising the pay, Dasgupta added: “The revision is being worked out by the state pay commissions who are expected to come out with the data by December this year.

He also informed that the state has decided to set up taxation information exchange system to prevent the revenue leakage system

He added that the total data of all the 730 commodities which are under VAT would be recorded through the system. He also informed that they have demanded from the centre to reduce the price of petrol.