Make Changes in VAT, to please businessmen Voters.

May 26, 2014 by

Arjuna (Fictional Character): Krishna, recently voters expressed their strong willingness for change and changed Central Government. Voters and Taxpayers have many expectations from the elected Government like implementation of GST, DTC, etc. Now in coming six months there is election in Maharashtra state.

Krishna (Fictional Character): Arjuna, todays voters are alert, they want improvements and change in the all fields. VAT, LBT taxpayers are facing problems due to various provisions of the rules and regulations in Maharashtra. State government should take necessary steps otherwise they may have to face the music from voters.

Arjuna: Krishna, what are the expectations of the VAT taxpayers?

Krishna: Arjuna, VAT taxpayers are facing problem due to increased complexity of laws, response from the sales tax department and predicted changes in the LBT etc. In this the major expected changes are:

  1. It is said that the additional surcharge on VAT will be levied by removing LBT. Taxpayers are agitating to abolish LBT. In this Businessman are thinking how and at which percentage additional VAT will be levied?. State government should consider these aspects and should take decision and remove LBT during the before period of election.
  2. VAT taxpayers get refund very late. Sales tax department seals the bank accounts of the taxpayers if he doesn’t pays taxes on time. However if taxes are paid in excess and refund claimed, then for getting refund taxpayers have to wait for many years.
  3. Further Sales tax department charges interest @ 15% p.a.  on tax recovery and while refunding it give interest of 6% p.a.  and that is only for maximum period of two years. What one should understand from this? Further for refunds in spite of filing Form 501 many times interest is not given by the department sue moto. These type of one sided provision needs to be amended.
  4. Sales tax department disallows the set off if the purchases are made from suspicious/non-filers dealers and recovers tax from the purchaser. However if the suspicious dealer pays the taxes, then the department does not refund the disallowed tax of the purchaser. It means department is collecting taxes from both the parties. There is no transparency in this issue.  Why department do not catch the defaulters first? Genuine dealers are put on ramson in mis-match cases.
  5.   This is computerized era. Sales tax department asks taxpayer to submit all the information online. But in sales tax department lesser use of computers is seen in assessment procedures. The officer asks for information manually which is already submitted online. Why so? It means taxpayers have been caught through all means but does department have any restrictions? Voters and department should think on this.
  6. From April 2014 onwards Sales tax department made filing of Annexure J1 J2 (TIN wise purchases and sales) compulsory along with VAT returns. Due to this taxpayers work has increased. When taxpayer will get benefit out of this system? As if mis-match found both selling and purchasing taxpayers will have to face the problem. Further sales tax department does not provide a dealer’s information system to check the miss match report sue-motto, as in case of Income Tax, taxpayer can verify the tax credit from Form 26 AS and act accordingly.
  7. Due to the recent new change in CST declaration issue system, the dealers have to give detailed information which is unwanted, while applying for CST declarations i.e. C Forms. While applying for this form taxpayers have to face many problems.
  8. Revenue of the sales tax department is increasing by collecting taxes though various ways but god knows how this revenue is used for benefit of dealers. Because infrastructure condition of the department is very poor at many cases. In department there is no enough facility for dealers. In departments manpower is also less and adequate training of Computer system is required in many places. Taxpayers should be treated respectfully and they should not be seen as thief. Further the taxpayer who pays taxes suffers. This should not happen and department should try to find the taxpayers which does not pay taxes, rather than punishing who pays taxes.
  9. If taxpayer does not fulfill the (documentation) requirements of the officer then officer makes ex-party order and levies interest and penalty. But this case is being reopened for next 2 years. Restriction of working on time should be there on to officers also. Introspection within the department is required in case of number of Ex-party orders issued, in spite of submission made in time by dealers.

Arjuna: Oh! It means lot of changes is required in levying VAT and in departments approach.

Krishna: Yes Arjuna, if voters decided to have the change then it is possible. Further GST Act is ready, but for implementing it, the work has to be done on war footing. Due to GST it is expected that existing complexities of the indirect tax laws will reduce. Taxpayer collects tax and deposits to government but government catches him. The one who never pays tax are free. If officer is worthy then rules and regulations are followed. But today it is difficult to find such person. As one hand alone cannot make the clap sound, greedy taxpayers are also responsible for today’s revenue situation. Therefore in new tax reforms solutions to both problems will have to found. By keeping in mind upcoming elections it is expected that changes will happen. Now the country needs a good tax system, so that industrial and financial development will happen.  Each citizen of India needs to rise above the mentality of tax avoidance and support the tax system.  Thus the state government should Make Changes in VAT, if they want to please businessmen Voters, otherwise change is inevitable.

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