VAT
in Goa from July
Sandesh Prabhudesai
10 April 2003
The Value Added Tax (VAT) regime will begin in Goa from 1
July, providing cushion of three months, while also replacing
the sales tax exemption holiday with another scheme.
The state however will scrap the entry tax, imposed on imported
raw materials, introduced in the state three years ago.
"The cushion is needed to provide breathing space to
the industry while shifting over to the new regime",
states chief minister Manohar Parrikar.
However, in view of getting prepared for the VAT regime,
the industrially backward state had already introduced new
scheme, called Goa Sales Tax Deferment-cum-Net Present Value
Compulsory Payment Scheme, 2001.
To attract industry to Goa, besides the income tax holiday
declared by the centre, the state was providing 15-year sales
tax holiday to the small industry and 10-year holiday to the
medium and large-scale industry. Later, in 2000, it was reduced
to 10 years and five years respectively, while discontinuing
the holiday scheme from 2001.
As the sales tax exemption would come to an end with the
introduction of VAT system from this year, the state replaced
it with Deferment Scheme, providing a similar cushion much
in advance to all the industries that were enjoying the ST
holiday.
As per the scheme, industries had to pay only 25 per cent
sales tax of the total value every month, while considering
remaining 75 per cent as subsidy.
The manufacturer is thus allowed to pass on this subsidised
amount to the customer by maintaining the price of the product.
"While this is already in force, the state is now seriously
considering to reduce the first year payment to 12.5 per cent",
states Y. S. Pai Bir, additional sales tax commissioner.
Goa is merely considered a manufacturing point by Indian
industry since neither raw material nor market for finished
products is available here that could fulfil the need of the
manufacturers. With the Deferment scheme, the state is thus
avoiding the danger of any industry shifting its base outside
Goa.
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