TN Govt to continue tax deferral, exemptions in VAT regime
November, 20th 2006
Large investors Hyundai, Ford, St. Gobain to benefit
"The rules and notifications relating to VAT in Tamil Nadu are expected by mid-December."
The Tamil Nadu Government will continue the sales tax deferral and input tax exemption incentives that it has committed to large investors even under the Value Added Tax regime, according to Ms S. Malathi, Commissioner, Commercial Taxes.
Addressing a meeting organised by the Southern India Chamber of Commerce and Industry, Ms Malathi said that the industries department would soon come out with orders detailing the procedures to claim the benefits.
On claiming input tax exemption, she said that suppliers selling components to Hyundai Motors a company eligible for sales tax deferral and input tax exemption would sell goods tax-paid. Hyundai would get a refund.
On the sales tax deferral available to units such as Ford Motors and St Gobain, the output tax payable to the Government would be deferred. The Industries Department will be making the appropriate announcement, she said. The rules and notifications relating to Value Added Tax in Tamil Nadu are expected by mid-December after the Assembly passes the Value Added Tax 2006 Bill, Ms Malathi said.
Once the monthly returns are filed there would be no need for an annual return, which would only be a `clubbing' of the monthly returns. There would also be no checks before the assessment order is passed, she said.
Provision has been made for VAT credit on opening stock as on December 31, 2006. But traders will have to make the claim fast with supporting documents, as there will be a time limit for availing this provision.
Tamil Nadu will have a list of capital goods eligible on which the industry can claim credit.
They would have three years to adjust input credit on capital goods with a ceiling in the first year and no limit in the second and third years.
Responding to questions, Ms Malathi said that the export-oriented units have not been `zero-rated' - a facility that has been extended to the special economic zones. There will be a system of refunds for the exporters.
Exporters, who have not dealt with sales tax till now, come under the net because of refund of input tax.
So there will be monthly claimants in export hubs such as Tirupur, Karur and Vellore. The Government is trying to enable refunds through the Electronic Clearing System.