Punjab SMEs oppose e-TRIP system

Small and medium enterprises (SMEs) in Punjab, already battling sluggish demand from large vendors amidst the slowdown, are opposed to tax collection by the state government through electronic means.

The e-TRIP (Electronically Transporting Information within Punjab) system was introduced to record intra-state transactions and curb tax evasion, and was expected to generate additional revenue of Rs 200-300 crore per annum.

Initially, any trader selling any commodity with a sale value of over Rs 3 lakh (and in the case of iron and steel, over Rs 2 lakh) was required to submit information on the transaction on the website of the state excise and taxation department (before the goods were physically moved), and was issued with an electronic receipt bearing a unique number.

Amid protests by traders, the state government recently slashed the number of commodities to be covered to six - cotton, mustard, plywood, iron and steel (excluding scrap), yarn and vegetable oil (edible and non-edible) - and reduced the sale threshold to Rs 50,000 (transactions below Rs 50,000 are exempt).

"We decided to select only those items to be covered in e-TRIP where there was maximum tax evasion. The main advantage of this system is to keep a check on bogus billing, which leads to evasion," one state government official told Business Standard. Small entrepreneurs however complain that filing e-returns would be cumbersome, and will act as a deterrent to its growth.

Avtar Singh, an industrialist from Ludhiana, said the state government had not taken traders and industrialists into confidence before implementing the new system. The system was also not applicable in the adjoining states of Himachal Pradesh, Haryana, Uttarakhand and Rajasthan. As a result Punjab is likely to face shortage of raw material and sale of finished goods will also be adversely affected, he claimed.

The president of the Induction Furnaces Association, Mandi Gobindgarh, Mahinder Gupta, said small buyers of steel have already pulled out of Punjab due to non-viability of business. This would affect the total volume of business, since at least half the steel is consumed by small buyers.

Upkar Singh Ahuja, joint secretary, Chamber of Industrial and Commercial Undertakings, Ludhiana, said that as far as goods being sent outside the state is concerned, the E-Trip is the same as E-ICC, which is already in force.

Moreover, the excise and taxation department is already conducting four-stage verification of documents, he said.