Traders moot central VAT

Traders have mooted the idea of an alternative value-added tax (VAT) regime that will be centrally administered.

This comes at a time when the empowered committee is still trying to sort out the anomalies in the present VAT regime.

In a memorandum submitted to Chairman of the Empowered Committee Asim Dasgupta, the Confederation of All India Traders (CAIT) has suggested to turn the present VAT system into a centralised one, where the total tax rate proposed to be levied on any commodity can be shared proportionately between states sending the goods and states receiving them.

"India being a federal country, a consensus and uniformity in the tax system is difficult, said CAIT Secretary-General Praveen Khandelwal. Therefore, the VAT, if administered centrally, can be a good taxation system," said CAIT Secretary-General Praveen Khandelwal.

The trade body said this system would work provided it incorporated the basics and all the indirect taxes merged into it, removing all barriers from internal trade.

The CAIT said the European Union, while adopting VAT, had recommended such a centralised system.

The centralised VAT system would take care of the revenues of both the producer and the consumer.

At the same time,it would reduce paper work and leave small traders and retailers out of its ambit, he said.

The trade body suggested dealers importing goods from another state could be treated as "deemed manufacturers" as in the case of dealers importing goods from other countries.

The CAIT also said if the proposal got approved by the empowered committee, it was ready to undertake an in-depth study on the subject and would submit its report for the consideration of the empowered committee.

The CAIT drew the committee's attention towards the complexities arising out of the maximum retail price in consumer durables and retail prices in case of medicines.