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| Apr 02, 2005 1:42 am |
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[VAT] - Tamil Nadu must |
SOEB FATEHI
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Finally VAT!
Finally we have the government we need. We must have done something good to deserve it. Some of us must have really done something very good to outweigh those who didnt.
20 states at last count. Meghalaya is expected to implement VAT later this week, taking the number of states where VAT is in force to 21. More states on the way to VAT at the time of compiling this note.
Regardless of all the problems that appear to be facing the VAT, the very fact that 20 states now come under the new regime is a significant development and one that promises a new and modern taxation system for India.
Now, despite major and minor snags and glitches, and despite the few states ruled by lesser marginal parties, taking the retrogressive stand of opting out of the regime, VAT has come into force in a major part of India.
Inadequate preparation for VAT may still, however, come as a constraint to the smooth implementation of the system. Take, for instance, the differences in the rates. The two rates of 4 and 12.5 per cent mean that in many cases there may still be an incentive to evade taxes and stay out of the VAT net. This might defeat the objective of increasing the public compliance that is expected to come with the VAT. Also, there seems to be a lack of harmony between the lists that the different states are proposing. This, again, could lead to difficulties which may become visible over the next few weeks as tax returns are filed. It is important that the states that have been brave enough to implement the VAT, address these problems and solve them as soon as possible.
The change from the sales tax regime to value-added tax (Vat) has led to new business possibilities in the SSI segment for the off-the-shelf software accounting and financial product vendors. With aggressive pricing for a total business solution which includes a PC, a printer and an accounting software, the sofware companies are trying to penetrate the SSI sector which never thought of implementing a point-of-sales (PoS) system. Ultimately, it will depend on the perception of the owners of SSI units who would need to be convinced about the benefits of the system implementation rather than continue with hand-written cash memos. We may not witness a major surge in demand for accounting software because a large number of small and medium enterprisess already have implemented PoS to record their transactions.
Thank You Dr. Manmohan Singh and Thank You Mr. P. Chidambaram.
We are glad that we have found a Prime Minister who is not weak kneed in the face of the politically motivated opposition. We are proud of a Finance Minister who has a spine and is willing to take the nation forward inspite of his being burdened with coalition pressures.
Jai Hind!Private Reply to SOEB FATEHI (new win) |
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