Punjab has raced to the third spot from a rank of 24; it held a couple of years ago as far collection of value added tax (VAT) is concerned.
Just three days before Chandigarh is to host a meeting of empowered committee of state finance ministers under the chairmanship of Asim K Dasgupta, finance minister, West Bengal, Punjab chief minister, Parkash Singh Badal on Friday claimed that “in the first six months of 2008-09, Punjab has achieved a 38.9% increase in VAT collection”. He claimed that with this growth rate in VAT, Punjab had emerged at third spot in the country.
Badal claimed that “Punjab had created a record on the path of progress and development as unprecedented growth in VAT collection was concerned” Elaborating the point, Badal said actual VAT collection in year 2006-07 was Rs 4778.69 crore, which was just 11.4% more than the collection in 2005-06 or in value terms it was Rs 488.38 crore more than the previous year. At that rate, Punjab stood at 24th spot. However, during the tenure of present government, the VAT collections jumped to Rs 6643.48 crore in 2007-08 which was Rs 764.80 crore more than the collections under this head in 2006-07 or 16 %. With this growth, Punjab managed to reach 9th spot.
However, a turnaround was witnessed in the first six months of 2008-09 when VAT collections went up to Rs 3330.82 crore in six months, which was Rs 933.65 crore more than the collections during the same period last year or 38.9 % more than the same period last year. With this unprecedented growth, Punjab has climbed the ladder of growth and reached third spot in VAT collection.
Interestingly, the Punjab government had projected a figure of Rs 6,290 crore for the year 2008-09 as far as VAT collections are concerned, which was 20 % above the VAT collections in 2007-08. However, actual growth was much above the projected figure and if this trend continues, Punjab may become the front-runner state in terms of VAT collection as neighbouring Haryana has projected a growth of 21% for 2008-09.
The excise department sources told FE that registration of more than 15,000 more traders under VAT during the current fiscal, besides improvement in VAT billing and sustained efforts in ensuring compliance did the trick. Another factor that led to buoyancy in VAT was the fact that the Punjab government ruled out reduction in VAT on petrol and diesel, which is at present 27.5% and 8% respectively and highest among all the northern states. In fact, in the state capital Chandigarh, the VAT on petrol is 22 %. A major portion of VAT in Punjab comes from petroleum products and last year, of total VAT collections, VAT from petrol only accounted for Rs 1,239 crore, agriculture accounted for Rs 592 crore, liquor Rs 24 crore, automobiles Rs 497 crore and other services Rs 2,317 crore.
Meanwhile, it is learnt that alongside the meeting of the empowered committee of state finance ministers, principal secretaries and secretaries (finance and taxation) and commissioner of trade taxation would also be held to deliberate latest position of VAT revenue and VAT and CST compensation, references received from the Centre. The views of the Centre on the GST model and roadmap (if received by then), the latest position of issue of C form, reference received from government of India and progress made in the implementation of TINXSYS is likely to be discussed in the meeting.