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Govt mulling hike in VAT to boost revenue
August, 10th 2015

Is Telangana government mulling a marginal increase in Sales Tax or Valued Added Tax (VAT? Will customers, who buy readymade garments or even computers, need to shell extra money? Such a possibility is not ruled out as there is a chance of upward revision of Sales Tax as the government has increased the target for mopping revenue from Sales Tax.

In the budget 2015 it had aimed to mop up Rs 35,463 crore from sales tax. But now it revised upwards it to Rs 40,000 crore. According to official sources, contribution from VAT is nearly 85 per cent while 15 per cent comes in the form of Central Sales Tax (which is levied when goods from Telangana State are sent to other states).

Following the decision to revise the sales tax target upwards, the government constituted a three-member Ministers panel led by Minister for Commercial Taxes Talasani Srinivas Yadav to explore all options to ensure that revised target was met. Finance Minister Eatala Rajender and Irrigation Minister T Harish Rao are assisting the Commercial Tax Minister in this task.

The government usually gets a major chunk of VAT revenues from petroleum products, PSUs like Singareni, BHEL, etc., and liquor. Also 14.5 per cent VAT is collected on electrical and cosmetic goods, star hotels with turnover crossing Rs 5 crore. Five per cent VAT was levied on readymade garments, electronic goods, computer sales, foodgrains, oils, iron and steel.

Upward revision of VAT on general goods from 5 to 6 per cent or higher and on others from 14.5 to 15 per cent is the only left for the government to increase the revenue. Although this move is the easy way out, it may provoke criticism against the government from different sections of people, especially political parties.

When The Hans India contacted the JAC leaders, they suggested strengthening of the Commercial Taxes Department to plug the leakage instead of upward revision of tax. Fifteen check-posts are functioning in various districts after formation of Telangana State. However, some of them lack even basic facilities.

In Nalgonda one check-post is just on paper while staff are working under a tree in other check-posts in the same district. How can the government expect to plug leakages if such basic issues are not addressed, questioned a senior leader.

 
 
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