84 per cent people welcome VAT: PWC Survey
New Delhi, Apr 20 (UNI) The overall transitional experience from the sales tax regime to the Value Added Tax (VAT) system was smooth for majority of the states (84 per cent), a Pricewaterhouse Coopers' survey revealed.
The Pricewaterhouse Coopers VAT Survey 2006 was released on the eve of the VAT regime completing one year.
The survey was conducted in order to document the experience of businesses across various industrial sectors.
''The transition was probably smooth due to the fact that almost 97 per cent of the participating companies had either dedicated teams or had appointed consultants to assist them. Further, the smooth transition was also possibly due to the prolonged delay in implementation of VAT, giving time for the industry to prepare itself for the change,'' Pricewaterhouse Coopers Leader of Indirect Tax Practise S Madhavan said.
''The results provide useful insights on how the VAT has come about and how it has impacted prices in general and business efficiencies in particular. It also highlights the manner in which both industry and the State Governments have handled the transition,'' he added.
The survey showed that only 18 per cent of the respondents felt that the State Governments were fully prepared for the switch over to VAT while 76 per cent of the respondents felt that the States have not been successful in bringing about uniformity in the structure of VAT, which was one of the key objectives of VAT implementation.
''Non uniformity in the VAT rates across the States has adversely impacted companies with all India operations as they have to reckon with varying rates in different States,'' Mr Madhavan said.
The survey highlights that 57 per cent of respondents did not perceive any change in prices due to VAT, which affirms that the introduction of VAT has been largely price neutral on an overall basis.
Only 25 per cent of the respondents felt that the VAT regime has had a significant impact on their business models which is a very interesting and counter intuitive finding.
Further, the self assessment system which is a highlight of the VAT, in contrast to the erstwhile sales tax, has cast a huge responsibility on businesses with regard to compliance with VAT rules and regulations.
Five areas were indicated by the survey respondents where further improvements in the VAT regime were required-- introduction of uniform product classifications, extension of input tax credits to Central Sales Taxes paid on procurement, adoption of a practical approach to VAT audits of assessees, introduction of single window assessment processes for all State taxes and a change in the mindset of VAT administrators.
This survey provides useful insights on how the VAT has come about and how it has impacted prices in general and business efficiencies in particular. It also highlights the manner in which both industry and the State Governments have handled the transition.
UNI MP SS KP1902