‘VAT is good for economic health’

<div class="section1"><div class="Normal">MANGALORE: Many hurdles have delayed implementation of the Value Added Tax (VAT) system. Chief Commissioner, Customs and Central Excise, G.K. Pillai, who authored “VAT: A way out of the Indian tax muddle’, examines the ways and means to get out of this muddle.<br /><br />Your book gives the impression that it is a panacea for all ills plaguing the society.I would not call it a panacea, but a ‘tax reforms package’ which takes into consideration tax rates, improve our tax to GDP ratio and growth rate. I have started with the premise that economic parameters at present will lead to a total collapse in a decade. It is not a prediction, but based on facts and figures.<br /><br /><span style="" font-weight:="" bold="">What is preventing its implementation?</span><br /><br />Many states are ready with the legislation. But if you go through them, you see a lot of inconsistencies from one state to another, though the Centre has given a model legislation. Hence, they have not been approved by the President. <br /><br /><span style="" font-weight:="" bold="">What does VAT offer for the salaried? </span><br /><br />If you have very few VAT rates, the tax incidence is clear. At present, we have Cenvat, which is working well. Unfortunately, the state governments have failed in educating consumers.<br /><br /><span style="" font-weight:="" bold="">Why are traders apprehensive about VAT?</span><br /><br />One apprehension is that they may be harassed because their earlier transactions were reported at a lower level and VAT will reveal everything. The second is valid as it puts a plug on illegal trade. The governments should assure traders that earlier transactions would not be looked into.</div> </div>