UP mulls simplifying VAT

Acceding to the long-pending demands of traders in Uttar Pradesh, the state government is planning to simplify the present structure of value-added tax.

"We have prepared a draft seeking the amendments in the present VAT system and want to make it trader-friendly. We are also working to develop a software for the traders to submit their returns online. We want to make it a paperless procedure," Govindan Nair, principal secretary (commercial tax), told Business Standard.

The state government also announced exempting handmade carpets (silk and wool) from VAT. "We will also close about 50 check-posts in the state in phases in order to safeguard the traders' interest. Unclassified items will also be categorised," he added.

For records, revenue collection after the implementation of VAT in Uttar Pradesh has shown good results in the first quarter. The collections showed an increase of 11 per cent for the first three months of the year. The increase in the collections in the corresponding period last year, on the other hand, were to the tune of 5-6 per cent.

Uttar Pradesh introduced VAT on January 1 this year. "The initial 3 months under VAT have been good and we are hopeful of a further rise in the collections for the rest of the year. Moreover, we are working to simplify the procedure to help the traders," Nair said.

The department has set a revenue collection target of Rs 19,555 crore (Rs 195.55 billion) for the current year. The collections made last year (2007-08) were Rs 15,040 crore (Rs 150.4 billion). "We expect an increase of 30 per cent in the overall collection this year.

Although we have suffered losses from the oil sector, the collections made under the non-oil sector show 14 per cent increase. The state suffered losses of Rs 1,000 crore (Rs 10 billion) from the oil sector last year "mainly due to stay on entry tax", he added.

The overall increase in the non-oil sector was 14 per cent for a period of three months. Nair was present at an interactive session on VAT organised jointly by the Federation of Indian Export Organisations, northern region and the UP Export Promotion Bureau, Lucknow.