Though the adoption of the value added tax (VAT) regime in Uttar Pradesh was ridden with protests and opposition, the state has witnessed unprecedented buoyancy in collections of VAT in the first three months after implementing it. From January to March this year, VAT collection registered 11% increase in revenue collections over that of the corresponding period last year. According to Govindan Nair, principal secretary, department of tax and registration said that the general experience so far has been good and the department is hopeful of making a record revenue collection in 2008-09. ?We have fixed a target of collecting
Rs 19,555 crore in this fiscal, which is 30%, more than the actual collection of the previous year,? he said.
Speaking to FE on the sidelines of an interactive session on VAT organized by the Federation of Indian Export Organisations, Nair said that there were some teething problems in implementing VAT in the state but all that would be streamlined soon. ?This system is just four months old and we are still trying to learn what kinds of problems people are facing and trying to identify the bottlenecks. In fact, we are also in the process of preparing an amendment to the VAT Act, in which we are incorporating the suggestions that are being provided to us regarding rationalization of rates, classification of unclassified items and other important issues,? he said.
Stating that the revenue collection in the oil sector last year had not been good, Nair said the state government had lost revenue to the tune of Rs 1000 crore last year in the oil sector largely due to the stay in the entry tax.
?The non-oil sector meanwhile has registered a overall increase of 14 % in the last three months.?
Interacting with the exporters, Nair said that the export sector in general is going through bad times. ?The export turnover in UP, too, has dipped and we are rather worried about it. We are trying to look for a solution as commercial tax provides almost 60% of the state?s revenue, which is very important for development and resource generation,? he opined.
Interestingly, Nair also announced that the handmade carpet industry in UP, which was spread across Bhadoi, Mirzapur and Varanasi districts and was producing almost 75% of the country?s total handmade carpets, would be exempted from 4% VAT that had been imposed upon it since January. Speaking to FE, Abdul Hadi, secretary of the All India Carpet Trade Fair Committee welcomed the exemption and said it was a step in the right direction. ?This rural-based industry spread across eastern UP is working under extreme adversities. In fact, the industry has started migrating to Panipat and Bikaner due to the negligent attitude of the state government. Apart from lack of basic infrastructure, the high handedness of the trade tax department is killing the traditional art form in the state. In fact, the export share of the Bhadoi carpet industry has fallen to 50% last year from 70% in the last few years due to this. The relief from VAT is one positive step that will go a long way in keeping this rural industry in UP,? he added.
It may be mentioned that Uttar Pradesh was the last state in the country to have adhered to the VAT system. The reason behind this was the stiff opposition by the traders and manufacturers.