Vat To Streamline Indirect Tax Collection: Cii

The value-added tax (VAT) Bill will act as a self-regulated mechanism for the government in collecting indirect taxes. This will make the entire tax collection system a lot more efficient and will lead to lesser revenue expenditure on the collection system itself, according to the Confederation of Indian Industry (CII).

CII feels that the Gujarat government has shown complete faith in the business community of the state by doing away with any checking system for taxes that an individual is supposed to pay. The VAT Bill has put the entire onus of revelation of taxes on dealers and retailers.

In this way government will only need to interfere to assess the books only if there is any change of ownership, nature of business, transfer of business or, if the government itself feels, that the returns are not tallying with the particulars of the books filed, the trade body said.

 

However, CII has pointed out that even if the dealer is at default and fails to furnish the taxes within the time prescribed, though his license will not be cancelled, he will have to pay an interest rate of 18 per cent a year on the total tax due to government.

The Bill calls for a self notification by the dealer to government regarding any changes of name or ownership for amendment in registration, failing which, he will have to pay a penalty of Rs 100 a day to a maximum of Rs 5,000 after which his license will be automatically cancelled.

According to CII, the only counter-check on the system is that if a businessman is buying input from an unregistered dealer then he will not be liable for input-tax return. Thus, to take advantage of the input tax provision, the buying trader will need to have a receipt proof from the selling trader, who is registered.

So bulk input buyers will not be interested in buying from unregistered dealers and it will not be feasible to maintain a growing profitable business without registering with the state. Thus, easy book maintenance by recording the receipts and payments made and filing for the returns quarterly will help the business community to adjust to VAT easily.

The dealers, retailers and other stakeholders in the value-added tax chain has been given the full independence to claim himself to be not in the tax bracket (after registration) and deregister after filing proofs. The certificate of registration will need to be given back to the government within seven days from deregistration.