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Govt stands firm on VAT
January, 25th 2012

Textile traders' protest against VAT entered its second day on Tuesday bringing the business in this sector across the state to a complete halt. Officials of commercial taxes department, however, continued to take a firm stand saying there was no going back and traders would eventually have to pass on the VAT burden to customers.

Speaking with TOI, commissioner of commercial taxes, Suresh Chanda indicated that there would be no softening on part of the government. "We have been instructed to collect tax and there has been no change in the directive given to the commercial taxes department," he said.

Explaining the government stand, Chanda said, "It is the individual state's discretion to levy tax. Every state will have to eventually impose tax on textiles as it was removed last April from the list of items on which additional excise duty is charged. Textiles were under this category from 1957 until last year and hence VAT was not imposed. But once removed from that list, it becomes taxable. It is then up to the state government to decide when it wants to collect tax."

Pointing out that customers would have to bear the brunt of the tax and not textile traders, Chanda said the fears of traders about VAT being not affordable for them were unfounded. "Traders feel that they are going to be paying tax out of their margins. In truth they will only have to collect it from the customer and give it to us. We have tried to explain it to them on numerous occasions," he said.

When asked about concerns expressed by traders about losing out business to other states, Chanda said that it was highly unlikely. He opined that having been out of the tax bracket until now, the traders do not want to be taxed. He said that only traders who have a turnover of Rs 40 lakh and above fall under the VAT bracket.

Claiming that 1600 traders have already registered with the department, Chanda said traders will ultimately have to pay tax dues from July last, along with a 25 to100 per cent penalty according to norms for defaulting on tax payments.

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