VAT to be implemented in UP from Jan 1: traders to protest

Lucknow, Dec 21 (UNI) Admidst protest by traders and Opposition parties, the much awaited Value Added Tax (VAT) regime would be implemented in Uttar Pradesh from January 1, 2008 after the state government issued a notification to this effect last night.

The state government issued the notification following the President's formal assent on Wednesday.

A volumnious 278 page document has come as a mixed bag for consumers. The list of commodities included for 4 per cent tax are: wheat, rice, pulses, vegetable oil along with 140 other items. So far there was no tax on these items.

Similarly, cars and two-wheelers are likely to be costlier marginally. Under VAT regime, the tax on these items would be levied at the rate of 12.5 per cent instead of the present 12 per cent.

There, however, would be no tax on Benarasi sarees, chikan items and other locally produced products such as silk sarees and handloom cloth produces in Azamgarh, Akbarpur and elsewhere in the state.

Tax for the bullion market has been fixed at one per cent. But at the same time artificial jewellery would be taxed at the rate of 4 per cent.

Financial experts feel that a delay in switching to VAT would cause substantial losses to the state. The state would not be able to claim any reimbursement from the centre towards revenue losses suffered during the first year of the VAT implementation.

As per the Empowered Committee's recommendation, all states that switched over to the VAT regime by 2005 were entitled to total reimbursement of initial losses by the centre in the first year of implementation, 75 per cent in the second year and 50 percent in the third year.

UP's initial loss on account of this delayed switchover was likely to be Rs 3,000 crore.

But traders in the state are still not ready to accept the Mayawati government's decision to implement VAT with many organisations staging protests in the recent past.

The Opposition Samajwadi Party-backed Uttar Pradesh Udyog Vyapar Mandal led by the party's Rajya Sabha member Banwari Lal Kanchal staged a protest demonstration and burnt an effigy of the Chief Minister earlier this month. The Mandal has announced to hold demonstration from December 24 against the implementation of the new tax regime and would hold dharna and hunger strike in front of Vidhan Sabha from December 26 to 29.

Its rival body led by Bharatiya Janata Party (BJP) turned Bahujan Samaj Party (BSP) leader Sandeep Bansal also expressed resentment against the move.

A BJP-backed traders' organisation also staged demonstrations in Kanpur and has threatened to hold protests in other parts of the state as well.

It was the united opposition to the new tax regime that had compelled the Mayawati government to repeatedly defer from the issue.

The Indian Industries Association had also submitted a memorandum to the Trade Tax Commissioner suggesting suitable amendments in the framework of rules and procedures and relaxation of certain stringent laws under the prevailing Trade Tax Act.

UP is among the last states of the country to implement the VAT after the previous Mulayam Singh Yadav regime had rejected the new tax system claiming that it will create problems for the traders and the revenue collection would be less.

UNI