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| J&K tax revenue up by 44% | | | Early Times Reporter
Jammu | May 5
Finance Minister, Tariq Hameed Karra has called for designing an integrated tax model for goods and services that is compatible with the country's federal structure and ensures transparency and revenue buoyancy at the Central and the State level.
Speaking at a meeting of the Empowered Committee of the finance ministers from various states at Thiruvanthapuram today, Karra stressed the need for simplifying the tax structure through better technological interventions to ensure speedy flow of tax data between the states and the center. He sought immediate financial support from the Union Finance Ministry, on the pattern of North Eastern states, for computerization of Commercial Taxes Department in Jammu & Kashmir to streamline and make the VAT regime more trader-friendly.
Expressing dismay over the deviations being resorted to by some states neighboring Jammu & Kashmir in the implementation of the VAT regime, Karra said Jammu & Kashmir is suffering flight of business in some areas due to these deviations. He said while his State is strictly following the code of ethics on VAT laid down by the Empowered Committee, some neighboring States were making fast buck on account of fearless deviations. He said Jammu & Kashmir is one of the very few states of the federation that has complied with all the directives of the Empowered Committee regarding the implementation of VAT in general and rate schedules in particular right from day one.
Drawing the attention of the Empowered Committee towards the problem of non availability of C/D forms on inter state sales conducted by the industrial units for the year 2002-03 onwards, Karra said despite being raised several times, the issue remains to be addressed resulting in creation of huge demands on account of CST which can simply not be collected. He said section 8(5) of the Central Sales Tax Act, 1956 was amended in the year 2002 by virtue of which exemption from Central Sales Tax on interstate sales was made conditional subject to the production of declaration in Form-C/Form-D as per the nature of transaction. He said as per a notification issued by the Government of Jammu and Kashmir in the year 1998 under un-amended section 8(5) of the Central Sales Tax Act, the industrial units were availing exemption from the payment of CST on the sales of finished goods in the course of interstate trade and commerce without the condition of producing declaration in Form C/D.
Karra said since the notification had been issued under un amended section 8(5) of the Central Sales Tax Act, most of the dealers relied on the prior position when declaration in Form C/D were not required for availing exemption and as such did not collect the respective forms from the buyers from other states of the union. He said dealers are expressing their inability to furnish Form-C/D at this stage. He said now since the Assessments pertaining to these periods have started becoming barred by limitation of time the assessing authorities have no alternative but to raise demands as CST exemption would not be allowable in the absence of C/D forms, thus huge arrears are building up on this account.
Kara said in order to continue support to the State's industrial sector by affording it some more time to grow, as part of the Industrial policy, the Jammu & Kashmir Government deemed it expedient to grant some incentives to the industrial units in the shape of tax remission in lieu of tax exemption that was available under the erstwhile tax regime. This scheme envisages price adjustment to the extent of tax leviable on the sale of goods which is not to be deposited but is remitted. Since this tax component is only notional by way of adjustment only so as to keep the VAT chain intact, no refund of input tax credit is allowable on the interstates sales by the local traders who have actually not paid any tax while purchasing these goods from the industrial units of the State who are availing tax remission.
Referring to revenue collection in Jammu & Kashmir, Karr said the cumulative rate of growth in the State during the current financial year is 44.06%. The component of collection from VAT is 69% and from non-VAT items is 31%. The total revenue collection that stood at Rs. 888.12 crore ending March 2007 has correspondingly gone upto Rs. 1284.95 crore ending March 2008 excluding revenue collections on Motor Spirit and Diesel.
Karra said, with the approval of the Empowered Committee, Jammu & Kashmir Government has placed the hand-made carpets within 0% rate schedule from April 2008. He said in addition to hand-made carpets, the State Government has also made changes in the tax rate schedule of walnuts, other made-ups, raw wool and wool tops, raw tobacco and Bidis, machine-made washing soap, optical goods, paddy, rice, wheat and pulses and Rakhi thread. |
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