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Rina Chandran

"The industry has welcomed VAT, but there are worries about uniformity and implementation."

MUMBAI, April 14

WHILE several issues pertaining to value-added tax (VAT) still remain murky, support for its implementation has emerged from a company that has long promised to deliver a better picture: Kodak India.

VAT will level the playing field in the photography (imaging) industry, and prevent sales tax evasion, resulting in additional revenues to the Government, according to Mr R.S. Mani, Managing Director, Kodak India.

Sales tax on photographic paper is 8 per cent; the industry has seen rampant evasion of sales tax - up to 70 per cent in many eastern States, barring West Bengal, and up to 50 per cent in the rest of India, according to Mr Mani.

In Bihar alone, sales tax evasion is as high as 90 per cent. While there were numerous raids of distributors and photo labs in Madhya Pradesh last year, companies continue to take advantage of various loopholes - like ambiguity in the sales tax rate on photographic paper in Uttar Pradesh, and sales tax exemptions in some States such as Silvassa and Pondicherry, Mr Mani added.

In Madhya Pradesh alone, it was discovered that ST to the tune of Rs 20 crore was being evaded, he added. For smaller players competing on price, sales tax evasion becomes an easy option, he said.

"The industry has welcomed VAT, but there are worries about uniformity and implementation," Mr Mani said. "There is some resistance, but general compliance with sales tax will improve, and it will make sure people don't take undue advantage of loopholes."

The customer also has a responsibility in insisting on invoices, Mr Mani said. "Consumers sometimes do not insist on an invoice if they are told that sales tax will be an additional cost," he said. "They are not aware that not insisting on invoices can lead to sales tax evasion." With the correct implementation of VAT, it will also be in the retailer's interest to generate invoices, as he can then claim credit from the Government.

Kodak India, which is a major player in the domestic photographic products industry, derives a major chunk of its revenue from the consumer imaging market, comprising film negatives, cameras, printing paper and chemicals.

It also has a presence in commercial imaging, catering to the professional photographic market, including the film industry, and health and digital imaging segments.

The company has a distribution network comprising `super' distributors, distributors and retailers, numbering about one lakh in all, Mr Mani said. The company has checks in place, and insists on invoices at every step of the way, but believes the Government must also step up vigilance in this area. The Government could release advertisements encouraging the payment of sales tax - similar to the income-tax ads, he suggested.

"The Government has made the first move in introducing VAT - now it has to make sure implementation and adherence are done to a T," Mr Mani said. "It will level the playing field."

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