In order to assist the trade and industry, the Tamil Nadu Government had in the 2007-08 Budget offered sales tax relief for 61 specific products contrary to the Centres VAT guidelines.

According to the Tamil Nadu Commercial Taxes Minister, Mr M. Ubhayathullah, 30 goods were exempted from VAT, while the rate on another 31 items was brought down from 12.5 per cent to 4 per cent. The relief was given risking deviation from Centres VAT regulations and possible penal deduction at the time of reimbursement of Central grants, he said.

Addressing a meet on Tamil Nadu VAT implementation organised by the Indian Chamber of Commerce and Industry, Coimbatore on Tuesday, Mr Ubhayathullah cautioned against bill-less trade saying the Government chose to lower the VAT rate on the belief and also on the assurances from the trade that it would bring about higher tax compliance. But some traders continued with bill-less trading, betraying the Governments faith on offering moderate tax regime and affecting the smooth implementation of VAT, he said.

Coimbatore contributes normally 10 per cent of Tamil Nadus total revenue from commercial taxes. As against the States total revenue of Rs 19,817 crore collected in 2006-07, the Coimbatore division contributed Rs 1,267 crore. The divisions tax earning during April-June 2007 was Rs 417 crore as against the States overall tax collection of Rs 4,262 crore.

The cumulative tax collection showed a healthy 20 per cent annual growth despite the variations in the month-wise revenue.

But the tax collection from Coimbatore has for the first time showed a negative growth of Rs 4 crore during June 2007 when the total collection fell to Rs 134 crore compared with June 2006 revenue of Rs 138 crore.

On the clarifications sought by gold jewellery traders on taxation on jewellery items, the Minister suggested separate taxation one on procurement of jewellery and another on sale. He said Rs 5 lakh turnover ceiling for exemption from filing returns would hold be applicable to jewellery trade too.