Delhi fuel retailers pitch for lower VAT on diesel

NEW DELHI, March 15, 2011 (PTI): The Delhi Petrol Dealers Association (DPDA) has
requested the state government to reduce Value-Added Tax (VAT) on diesel to 9 per cent from
12.5 per cent at present, in line with the neighbouring state of Haryana. "400 petrol dealers of
Delhi are seeking parity in VAT with Haryana in the coming Delhi Budget for the year 2011-12 so
that smuggling of diesel can be checked," DPDA Vice-President Nishit Goel said in a statement.
The Delhi government, led by Chief Minister Shiela Dixit, is scheduled to table the Budget in the
Assembly on March 22.
Due to the Rs 1.25 differential between the price of diesel in Delhi and Haryana, most
transporters and taxi fleet owners prefer to buy more polluting Euro 3 Diesel from Haryana pumps
rather than the eco-friendly Euro 4 diesel available in the capital, he said.

Over 75 Percent of Mobiles Sold Without VAT in India

New Delhi, March 14th, 2011: The Central Board of Direct Taxes (CBDT) released a statement
on March 13, 2011 saying that a series of raids have been conducted on several mobile phone
retailers around New Delhi who were selling phones which were not properly registered and are
considered to be a potential security threat. According to the CBDT, retailers have been importing
mobile phones which do not have the legally required International Mobile Equipment Identity
(IMEI). The devices were predominantly imported from China. No records are made of the
phones as they enter the country, and they are sold to consumers with no Value Added Tax
(VAT) charge.
The CBDT raided 59 separate retailers across New Delhi, and found evidence of INR 2.3 billion
(approx. USD 50.84 million) of unpaid VAT. Tax authorities have already closed the stores of
some retailers who were found to be avoiding VAT levies or selling illegal handsets. According to
the Indian Cellular Association (ICA) approximately 30 percent of the handset sold in New Delhi
are imported from China with no EMEI, and sold with no VAT charge. High-end phones are even
more likely to be sold without a VAT levy, with nearly 75 percent of phones costing above INR 10
000 (approx. USD 220) are sold without paying taxes. Customs data shows that nearly 7.3 million
phones were imported into India in 2009, through the New Delhi Airport alone, and logistic
difficulties and it is impossible to verify the EMEI number of each device.

After 54 years, states free to levy VAT on sugar and textiles

Mumbai March 4, 2011: The Union government has allowed the states to impose tax on sugar
and textiles for the first time in 54 years. In his Budget, the finance minister proposed to amend
the Additional Duties of Excise (goods of special importance) Act, 1957, and decided to remove
sugar and textile from its schedule. After this amendment, states are free to levy value added tax
on these commodities after 54 years. These commodities were put under the scheduled
commodities, with the enactment of the Additional Duties of Excise Act in 1957 by the Nehru
government. Earlier, the Centre could only levy this tax on these commodities.
Due to the amendment, the Centre has given back these powers to states, which are scouting
for revenues, post implementation of the goods and service tax. "States will be free to levy VAT
on them once the finance Bill is signed by the President and it comes in force," said Dilip Dixit,
senior advisor, Tax & Regulatory Services, Indirect Tax, KPMG. However he feels, "It is unlikely
that any state government will do so in the near future."
The tax on these commodities could be a maximum of five per cent. At present, about 16
commodities are notified as declared goods. These include coal, cotton, cotton yarn, crude oil,
hides and skins, iron and steel, jute, LPG for domestic use and oil seeds. The amendment will be
effective after passing of the Finance Bill. Source: Business Standard.
Record VAT and sales tax revenue in UT
CHANDIGARH, February 21, 2011: Owing to consistent enforcement of excise and taxation
operations against transporters, and statistical notices to at least 200 city-based defaulting
shopkeepers and traders, the administration has
been able to generate a record value added tax and sales tax (VAT-CST) revenue of Rs 886
crore this year. Being the highest figure in the last five years and an increase of 30% over last
year, it is also said to be the per capita highest tax
received in the country this year. There are as many as 13,000 VAT dealers across the city, many
of whom had been regularly avoiding VAT payments. By end of March-end, the department
expects to a VAT revenue of Rs 1,000 crore.

High VAT deters growth of Punjab food processing units

Delhi. February 15, 20011: The food processing units scattered across Punjab are languishing
due to high tax structure framed by the state government. The units engaged in manufacturing of
bakery products, branded rice processing and wheat processing are in a tight squeeze due to a
value added tax (VAT) of 13.5 per cent. The state government had imposed a 10 per cent
surcharge on VAT in the recent past and the industry has been sending its delegations to the
state government to withdraw this in the coming budget.
According to All-India Bread Manufacturers Association President Ramesh Mago, "The food
processing industry in Punjab could have proliferated due to availability of plenty of grains and
green vegetables but the adverse tax structure has undermined the growth of this industry". He
added, there is no VAT on this industry in Uttar Pradesh and Himachal
Pradesh so they cannot export their products into other states. At the same times, the
manufacturers in the neighbouring states have the advantage of selling the same in Punjab due
to the lower cost. He apprised, many small manufacturers have cut down their production due to
non-viable business proposition.
According to CII Punjab State Council President and Mrs Bectors Foods Specialities Limited
Deputy Managing Director Akshay Bector, the estimated size of the food processing industry in
Punjab is in a range between Rs 800 crore and Rs 1,000 crore. Except for half-a-dozen big
players, mostly there are small and medium units. He said, the sweets are exempted from tax
and dry fruits are charged four per cent VAT. So, it is not conducive for the state to charge
cheaper goods with higher VAT in the state and allow the neighbouring states to earn profit.
Source: Business Standard.
Himachal Pradesh increase VAT on tobacco items
Shimla, February 4, 2011: Himachal Pradesh Voluntary Health Association (HPVHA) hailed the
decision of Himachal Pradesh Cabinet for increasing VAT on tobacco Products from 13.75
percent to 16 pc. The Global Adult Tobacco Survey India 2009-10 conveys that about 21 pc
(equals 1276222 persons) population of this hill state is using tobacco product in one or the other
of its form, consuming 18 pc of total tobacco production, which is higher than that of the average
tobacco users in Northern India. To be precise, Himachal Pradesh has 18.1 pc of the male
population of 15 years and above, who are daily-users of tobacco products as compared to the
average of 16.5 pc in the Northern India.
The decision of the cabinet is to impose uniform taxation i.e. 16pc on all the tobacco products –
cigarettes, cheroots, cigars, bidis, oral tobacco products-. Earlier, the tax on bidis was less, i.e. 4
pc only. It meant a loss of Rs1.94 crore annually to the state government. The total expenditure
of the population of Himachal Pradesh on Bidis annually is Rs16.21 crore. VAT collected at the
rate of 4 pc on it meant revenue of Rs65 lac only. With VAT increased to 16 pc, the revenue will
go up to Rs.2.59 crore.
Plea to waive VAT by Traders in Ranchi
RANCHI, January 30, 2011: Social organisations used Mahatma Gandhi's death anniversary,
observed as Martyr's Day, to highlight their long-pending demands and draw the attention of the
people in power towards the causes.Traders in Ranchi distributed rose buds to the commuters on
Main Road with a small card that appealed to the government
to repeal VAT on cloth and blanket. The card reads "Kadpe se VAT wapas lo" (waive value added
tax from cloth). Traders organised a small awareness programme and announced to intensify stir
if items like bedsheet, towel and pillow covers were not freed from VAT.

People want govt to slash VAT on fuel in Rajasthan

JAIPUR, January 18, 2011: The de-regulation of petrol prices has introduced people to a regime
of market economics,
where prices are determined by demand and supply. As crude prices have crossed $90-mark and
set to touch $100 per barrel, people in Rajasthan have once again started asking why can't the
government reduce high VAT rates to cushion the spike. The government of Rajasthan levies a
VAT rate of 28% on petrol and 18% on diesel.
 Every time petrol prices go up, the governments' (Both Central and state) tax kitties get a boost.
While it's win-win situation for the companies and the governments, the consumer remains a
perennial loser. Today, if the retail cost of petrol is Rs 52 per litre, 50% of that price is due to
various taxes. While the Centre imposes taxes like customs duties, excise, and cess constituting
25%, taxes at the state level in the form of VAT, dealer commission, and transportation cost,
account for another 22-24%. Source: Times of India.
Value added tax (VAT) on petrol is the highest in Punjab
Chandigarh, January 16, The 10 per cent hike in petrol prices in the past one month will see a
vast shift in sale volumes of the fuel from Punjab, to the neighbouring states of Haryana,
Himachal Pradesh and Union Territory of Chandigarh. Since value added tax (VAT) on petrol is
the highest in Punjab, dealers in the state, especially those having their operations near the
state's border, are worried that they will loose out on huge volumes in sale to these states.
Because of the high taxes in Punjab, vis-à-vis Haryana, Himachal and Chandigarh, petroleum
dealers in the districts of Ferozepur, Bathinda, Barnala, Sangrur, Patiala, Ropar, Hoshiarpur,
Gurdaspur and Mohali, have been witnessing a steady shift in business to these states. Petrol in
Punjab has been the most expensive in this region, while it is the
cheapest in Haryana. After yesterday?s hike, petrol in Haryana is cheaper by around Rs 6.40 per
litre, and in Chandigarh by Rs 5.95 per litre. Petrol in Himachal is cheaper by about Rs 3.90 per
litre.
As a result, residents of these districts prefer to get their fuel from the neighbouring states,
where petrol is cheaper. "Petroleum dealers are losing out on huge volumes in business, because
of high taxes in Punjab. While Haryana does not impose any cess, octroi or surcharge on petrol,
which ensures that rate of petrol is cheaper there. Chandigarh imposes 10 per cent surcharge on
VAT, but in Punjab, consumers have to pay VAT, cess, surcharge and octroi, leading to a 33 per
cent in state taxes. In this time of high inflation, more and more consumers in the border districts
are now buying petrol from neighbouring states," said JP Khanna, president, Punjab Petroleum
Dealers Association.
Source: Tribune news