The Punjab government has decided to pay interest on delay in refund of value added tax (VAT) under the new industrial policy 2009. The time period for issuing VAT refunds has also been reduced from 90 days to 60 days.

Talking to FE, Punjab industry and commerce minister, Manoranjan Kalia said, ?We have announced in new industrial policy-2009 that where an amount required to be refunded by the commissioner or the designated officer, to any person, is not refunded to him within sixty days, then a simple interest at the rate of 0.5% a month on the said amount shall be paid to such person. Besides, punitive action will be taken against the official and officer responsible for delay. Further, 75% of the VAT refund has been allowed against Indemnity Bond to the units, who are filing returns on monthly basis?.

VAT refund is one of the biggest issues, which affects industrial growth of the state. Industrialists usually rue about the inordinate delay in the VAT refund, which hampers working capital requirement of the industry. An amount of Rs 220 crore of VAT refund is pending with the state, A Venu Prasad, excise and taxation commissioner said. The state government will introduce the facility of online payment and direct refund of VAT into the bank accounts of the dealers. The option of e-filling of returns is already available to all the dealers in the state. VAT refunds get cleared after 100-150 days instead of 90 days stipulated for its disbursement under the VAT system, said R S Sachdeva, co-chairman of Punjab committee of PHD chamber of commerce and Industry (PHDCCI). ?Though the state government has introduced new measures in its new policy to resolve the issue, it should be implemented properly. Moreover, the government should bring more transparency in the system and should not shy away from giving the status of applications online?, Sachdeva added.

United Nations Industrial Development Organisation (Unido), which formulated the industrial policy had found that VAT refunds were subject to inordinate delays in Punjab. Unido had recommended that online payment and direct refund into bank account of manufacturer would solve menace of delays in refunds. If the refunds are not given within a month, the revenue department should pay interest at a penal rate to the manufacturer, it had said.