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Tamil Nadu is yet to publish draft bill on VAT. With hardly three weeks left for release of State Budget for 2003-2004, it is virtually impossible to have extensive debate after publication of draft bill on VAT .

MADURAI, March 7

THE Tamil Nadu Chamber of Commerce and Industry has sought deferment of implementation of the value added tax (VAT) by three months, giving time for detailed discussion of the draft bill and necessary changes.

Mr S. Rethinavelu, President of the Chamber, in a statement here has said the traders and tax officials in Tamil Nadu are still not fully aware of the various provisions, implications and procedural formalities of VAT. As the ultimate consumer should also have to pay tax under the new system, they should be inculcated with hitherto unknown tax culture through wide publicity.

Mr Rethinavelu has further said that many other State Governments have already published draft bill on VAT and made necessary changes after extensive debate and are ready for implementation in their respective states However in Tamil Nadu, the draft bill on VAT is yet to be published.

The chamber is of the view that the Value Added Tax System to be implemented in Tamil Nadu should contain the following provisions: (1) The turnover exemption limit for VAT registration should be fixed at Rs 5 lakh. (2) To protect small traders the annual taxable turnover limit for levy of VAT should be fixed at Rs 50 lakh. (3) Retail traders, while making sale to the ultimate consumer should be permitted not to mention the tax amount separately in the bill and allowed to charge total bill amount "inclusive of tax". (4) Once VAT is implemented, all other commodity or turnover based taxes should be withdrawn since States have been authorised to fix the Revenue Neutral Rate for majority of products between 10 per cent and 12.5 per cent only after taking into consideration the revenue loss to be sustained on account of scrapping the following taxes: additional sales tax, entry tax, surcharge, additional surcharge, luxury tax and market committee cess. There should be no other levy on commodities except VAT. 5) Set-off should be permitted for tax already suffered on stock on hand as on the date of implementation of VAT from the tax payable on their sales subsequently. Only after publication of the draft bill on Tamil Nadu VAT Act, recommendations and suggestions could be brought for consideration of the Government, he said.

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