Uttar Pradesh - VAT in for another amendment

The Value Added Tax (VAT) Act is headed for another amendment. This time, it will benefit businessmen dealing in multiple commodities.

Final touches to the blue-print of a proposal to this effect were given at the commercial tax department on Monday and Tuesday.

It is now pending with the state government for approval, senior officials at the department confirmed.

According to the amendment, those dealing in multiple commodities, will not have to give an item-wise detail of their stock. Instead, they will have to give broad details between the period April 1 and December 31 2007.

Assuming that a trader purchased stock worth Rs 100 in the beginning of the financial year 2007-2008, he would have to submit an undertaking saying "I have an opening stock (carry over stock from the previous financial year) worth Rs 20 as on April 1, 2007, total purchase made by me in 2007 is of Rs 100, total sale between April 1 and December 31 is Rs 55. Therefore, the remaining stock value as on December 31, 2007, is Rs 65."

Another change suggested in the proposal is that 55 per cent of the stock value will qualify for input tax credit (ITC) at a rate of four per cent.

Tax experts say that this would benefit businessmen in the field of automobiles, fast moving consumer goods, electrical goods and medicines.

The changes have been suggested following call of an indefinite strike by Chemists and Druggist Federation of Uttar Pradesh (CDFUP), scheduled to begin on January 31.

Association office-bearers had been negotiating with the department officials for the last couple of weeks in this regard. The traders feel that they would have to bear huge losses with the implementation of the Act.

Explaining the need of the change in context of his trade, patron, CDFUP, Giriraj Rastogi, said, "we were being compelled to surrender stocks procured more than six months ago.

The cost of this stock was worth lakhs of rupees for which medicine and drug traders had paid nine percent trade tax.

But if we want to retain the stock, we would have to pay an additional tax of four percent on the same. Also, we were not being given input tax credit for the stock which was more than six months old."

He added: "If the proposal works out, our problems would be solved to a great extent as the paper work would reduce by 70 per cent. Although we would still suffer, but the extent of the losses would be bearable."