In an effort to enhance State’s tax revenue, West Bengal today increased the minimum VAT from 4 per cent to 5 per cent beginning next fiscal. The upper ceiling of VAT is also enhanced by one percentage point.
While the item-wise details are not available, rise in prices of goods and services – except gold and silver – is expected. Immediate impact on petrol and diesel is not known. Both were previously exempted from VAT.
As usual, smokers will bear a maximum brunt of the revenue drive with taxes increasing from 20 to 25 per cent.
Presenting the Budget for 2013-14, State Finance Minister Amit Mitra said the State surpassed tax collection target by Rs 1,000 crore to Rs 32,000 crore in 2012-13. Overall own tax revenues were up 30 per cent in this fiscal.
Mitra is hopeful that the escalation of taxes and the initiatives to simply taxation procedures and enhance tax base would improve the own tax revenue in 2013-14 by 22.77 per cent to nearly Rs 39,000 crore.
Among the proposed reforms is doing assessment under VAT and CST rules. “Assessment will be made only in specific cases like defaulters in returns or evasion,” he said.
Large dealers assessed under CST Act (Central sales tax), will no longer be subjected to compulsory assessment under State VAT Act. Exporters with good track record (of paying taxes) will be awarded with “Satata (honesty) Star status” ensuring quicker refund.
The traders are no longer expected to maintain stock registers to claim input tax credit under VAT. The initiative is clearly aimed at widening the tax net.
“This is a big risk to take. But the Government believes the trust will be honoured,” Mitra said.
Small businesses with turnover up to Rs 5 crore (Rs 3 crore) a year are now allowed to opt for self audit. Mitra expects the step to reduce the tax compliance cost.