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WE CARE FOR CHENNAI
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[VAT] - Tamil Nadu mustViews: 358
Apr 02, 2005 1:42 am[VAT] - Tamil Nadu must#

SOEB FATEHI
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

Apr 03, 2005 3:21 am[VAT] - Tamil Nadu must#

SOEB FATEHI
i am curious and will like to know when Tamil Nadu will come into the mainstream of commerce by implementing VAT?

Private Reply to SOEB FATEHI

Apr 03, 2005 12:51 pmre: [VAT] - Tamil Nadu must#

Marketing Monster
HI,
i think Mr. Chidambaram has done a pretty good job. Our prime minister too.How much would VAT affect the consumer? Not much i guess.But it sure does affect a few traders coz a few sales taxes are still applicable till june 2006. We all sould try to understand that there is no prefect solution and it is not possible to please ever1.But i think Mr. Chidambaram is done a pretty good job and is sure accelerating in his journey towards perfection.

the economy is booming,sensex is rising,more joint ventures,lot of activity..its a million times better than BJP rule
cheers!
joel

Private Reply to Marketing Monster

Apr 03, 2005 2:25 pmre: [VAT] - Tamil Nadu must#

SOEB FATEHI
read what The Hindu says - - -

IndiaInc hails VAT implementation, urges all States to join

New Delhi, April. 1 (PTI): Terming implementation of Value Added Tax by 20 States as a historic development, the Indian corporate sector today asked the Government to abolish the Central Sales Tax to make India a common market and achieve economy of scale in production.

Apex industry chambers FICCI, and ASSOCHAM urged the States who have not joined the new tax system, to move over to VAT as it was 'trader-friendly and would generate higher revenue'.

"Introduction of VAT is a historic step that will totally revolutionise the tax system in the country and integrate domestic trade in a single national market, prevent evasion and boost the Government's revenue kitty," FICCI President Onkar S Kanwar, said in a statement.

States that have not implemented VAT would see the advantages arising out of higher revenues in the VAT regime, mainly because multiple point taxation would capture profits of distribution, Kanwar said.

Echoing similar sentiment, ASSOCHAM President M K Sanghi, said that resisting VAT in a few States would have serious implications as it has already been deferred five times.

FICCI suggested introducing VAT first and taking account of ground realities in ironing out practical problems.

Jai Hind!

Private Reply to SOEB FATEHI

Apr 03, 2005 2:27 pmre: [VAT] - Tamil Nadu must#

SOEB FATEHI
and . . .Writing for The Business Standard,
T N Ninan - New Delhi April 02, 2005 - - - - -




T N Ninan: Party of business?


Weekend ruminations


The BJP has just turned 25, and it has just committed a blunder which will be an embarrassment to anyone who has to write its authorised history 25 years from now.

In choosing to oppose the introduction of the state value-added tax system, and in getting all five BJP-ruled states to not implement the new tax system from yesterday, the party has dissociated itself from the most revolutionary change in the country’s tax system that we are likely to see in a long time.

The party that likes to see itself as being aligned with the interests of the business community has therefore acted against the interests of forward-looking businesses, and aligned itself with those whose primary objective is to defeat VAT, so that they can continue to evade taxes.

Everyone who understands business and economics in the party (and outside) knows this only too well, but the problem is that in its upper reaches, there aren’t many people who seem to care about (or even understand) good economics. As Prof. Jagdish Bhagwati famously remarked when told who the party’s economic thinkers were: “If they are economists, then I’m a Bharat Natyam dancer!”

Ironically, most political writers consider the BJP to be a party of the right. This is far from certain, and some would argue that it should more properly be called a party of the left. Don’t forget that when the party was formed a quarter century ago, its creed was “Gandhian socialism”, not capitalism or market liberalism.

The BJP was critical of the reform programme when Manmohan Singh launched it in 1991, arguing that it was subjugating us to the diktat of the World Bank-IMF, that it would lead to the de-industrialisation of India, and other such nonsense. And its first instinct when it came to power in 1998 was to raise tariffs and limit the role of international capital. Even today, it is not quite sure that globalisation is such a good thing for India.

To argue that the party has doubts about an unrestricted market, wants to protect the “small businessman” and be mercantilist, if not protectionist, is not to suggest that it was ever in favour of the Congress brand of statism. With its core political base among the community of traders and small businessmen, the BJP was certainly against an overweening role for the government and for the “inspector raj”.

But equally, it was against the uninhibited rule of the market and large companies since these, it felt, threatened India’s indigenous business community. That is why, even today, it opposes foreign direct investment in retailing—although studies have shown that India’s retail trade is disorganised, inefficient and costly (proof of this is the large gap between producer and consumer price). The willingness to try and sabotage the introduction of VAT should be seen in this light.

But among the things that most needs reform in India is the tax administration. It is corrupt, leaky, inefficient, predatory—and iniquitous, in that it penalises the honest and lets the dishonest get away scot free.

There is no one solution to all these problems, but the value-added tax system is one of the solutions. By creating a chain of transactions, each of which is taxed at a moderate rate, and by providing set-offs for tax paid earlier in the transaction chain, it does two things at the same time: it plugs loopholes and also reduces the incentive to cheat.

The state VAT system that has come into effect from yesterday in 19 states is, therefore, the most important change in India’s tax system in decades. It has been a complicated exercise involving coordination between the Centre and states, years of preparation, and many new laws.

The new system may not be an operational triumph from Day 1, for many reasons. But it is here to stay. And the BJP is on the wrong side of history and wrongsiding business by opposing its introduction. Whatever short-term advantage the party seeks will be of no political consequence in any future elections.

Since the party has turned 25, surely it is time for the BJP to develop a coherent economic philosophy and stick to its logic as a sign that it has grown up?

Jai Hind!

Private Reply to SOEB FATEHI

Apr 03, 2005 2:28 pmre: re: [VAT] - Tamil Nadu must#

SOEB FATEHI
Lalit - FUFA Moderator - says - - - - -

WILL VAT affect the housewife?

No.

There is a lot of misconception regarding the increase of prices due to the application of VAT, these will get cleared once the VAT is actually implemented.

The daily functioning of a household will not be affected, since items like food grains, eggs and bread, and meat and vegetables are out of the VAT net.

"Food grains are exempted, and most of the other items are on the old rates at four percent. I don't think there will be a difference," said I K Verma, Commissioner, Sales Tax.

Government has also passed a notification which says that items like medicines may actually get cheaper. Earlier, they attracted an eight per cent tax, but now it will be only four per cent.

WELCOME to the VAT regime. India continues to look forward.

Cheers

Private Reply to SOEB FATEHI

Apr 05, 2005 2:31 pmre: [VAT] - Tamil Nadu must#

H@r!$h Vittal

Actually, it will affect all of us!!
Positively that is..!

Greater Transparency in the system. The flushing out of unneccessary middlemen which add to product cost and ensures a leaner efficient market system.

Private Reply to H@r!$h Vittal

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