Five Years Of VAT Introduction: Observes Mixed Results

After five years of introduction of Value Added Tax (VAT) in the State, the mixed results are being observed. The government earned the huge revenue in absolute terms but the growth rate on yearly basis was the lowest during the period.

The revenue collected was Rs. 26,165 crore, which was the highest but the rate of growth was unfortunately 12.5 per cent in 2009-10. The rate had never declined below 13 per cent after the introduction of VAT in the State in 2005-06.

Commercial tax officials feel the growth rate was disturbed due to reduced sales and reduced rates in main sectors like cement, petrol and diesel due to recession. VAT collection from petroleum products was only 0.34 per cent more compared with 2008-09 revenue due to decline in prices. The cement sales were reduced due to fall in the real estate market. The insignificant performance of the three sectors was somewhat balanced by liquor sales, which collected a 19 per cent more tax.

The growth rate observed in excise was 18 per cent and in motor vehicles tax was 16 per cent in 2009-10. But, there was negative growth for the Registration and Stamps Department as the revenue from registration of lands reduced by Rs. 500 crore due to recession.

The high excise revenue was connected mainly to little upward revision of excise duty structure and rise in MRP. The VAT collection increased from Rs. 2,176 in January to Rs. 2,938 crore in March. (Source: The Hindu)