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This story is from September 9, 2006
Traders cheat you in the name of VAT
Sixteen months after VAT was introduced in Karnataka, consumers are being taken for a ride. They pay more for each product because of VAT.
The issue, raised right from the beginning about VAT, is: it should be woven into the maximum retail price (MRP) marked on the product.
But look closely when you buy packaged goods — toothpastes, soaps, fruit juices. If the bill says VAT at the bottom and imposes extra amount, you are being cheated.
The commercial taxes department is planning random raids on trading establishments to check if prices in the market are being hiked by additional VAT. But they admitted that they cannot do much more to prevent it on a large scale.
"We've no way of monitoring this as the networking needed has not been done. It will take another six months for the required software to be in place, but even then, we cannot track each product right up to the consumer,"commercial taxes commissioner B A Harish Gowda said.
The department also does not have statutory powers to take action against traders. It can collect taxes, but it cannot ensure that benefits are passed on.
In the absence of any such policing, traders/manufacturers exploit the ignorance of the consumer, pocket the tax amount built into the MRP, and impose VAT as an additional amount.
In the case of medicines, particularly, VAT is mentioned over and above the cost of the medicine and added to the bill amount. Traders, however, choose to blame manufacturers for the 'extra' VAT.
"The manufacturer prints 'MRP plus taxes extra' on the product. Naturally, traders charge VAT extra. The MRP itself should be removed and prices be fixed as per market rate,"B K Goyal of the Association of Karnataka Trade and Industry maintained.
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