VAT: need to dispel misgivings

In all, 21 states have implemented the Value Added Tax (VAT) from April 1. Five BJP-ruled states (Gujarat, Madhya Pradesh, Rajasthan, Chhattisgarh and Jharkand) and two other states (Uttar Pradesh and Tamil Nadu) have decided to stay out of VAT mainly on political considerations.

The Centre has assured 100 per cent compensation for losses incurred in the first year from the existing tax regime to the states. However, there is confusion among people about the tax structure, maintenance of accounts and VAT register. Tax experts say that since there is no penalty in the first year, there is no cause for concern. However, tax authorities themselves are in a dilemma because of the ambiguity in the new VAT regime.

Tax credit is also plying havoc in the minds of the tax assesses because they must have thorough knowledge about tax credit at every step where the value is added.



Stock in trade is also important. The traders and the industrialists are grappling with the problem of stock with the tax regime change. For there is no input tax credit provided for inventory brought before April 1, 2004. Moreover, stock transferred to a branch will attract tax though it is exempted through Form F under the existing CST in case of inter-state transactions.

I feel VAT also violates the basic accounting principle, First in First Out (FIFO). People have a Hobsonís choice. Love it or not, they seem to be accepting it, But one cannot ignore it.

ARUN SINGLA, Lecturer in Commerce Cheeka (Kaithal)


I would like to draw the attention of the Defence Minister towards the imposition of VAT on lakhs of serving and ex-servicemen in the defence forces. Prices of all the items in CSDs are likely to increase due to VAT.

Countless Indian soldiers have laid their lives for the nation, leaving behind young windows and children having no source of income except the meager pension as per the policy in force and the CSD facility to adjust their budget. Now every family of serving and ex-servicemen is in a dilemma. The enthusiasm of joining the defence forces would go and demoralise the employees if VAT is forced on CSD items. The Defence Minister should intervene and do justice.



The introduction of VAT in 21 states and all Union Territories from April 1 is a remarkable endeavour by the Centre to attain self-reliance in the days to come. We are now the 135th country to implement this tax structure.

However, there is a hue and cry about VAT among both traders and people. The reason for this is the governmentís failure to make people understand properly the VAT system. When we have plethora of information gadgets, I do not know why these have not been made best use of to dispel the misgivings.

Moreover, though we have many universities, except the agricultural universities, the extension activities of other universities are almost negligible. University teachers who are specialists in economics and commerce should come forward to make people aware of VAT.

Dr K.V. SINGH, Nahan (HP)

Beyond classroom teaching

The examination season has come. It has now become fashionable for some schools to go overboard with the examinations. The schedule for junior classes resembles that of the Civil Services examination.

Most schools seem to believe that classroom education is the only stepping stone to success. In the process, they overlook other talents and skills of students like music, painting and sports and qualities of head and heart such as courage, chivalry, personality, wit and friendship. What are these schools doing to inculcate these qualities in children? Instead of pushing and prodding the children like beasts of burden and leaving them dazed and flabbergasted, they should aim for the overall development of children.

The main problem is our inability to live peacefully with others and our grab mentality. The schools have to teach the students the age-old values of brotherhood, tolerance, team spirit, satisfaction and sacrifice. Extra-curricular activities have a vital role to play in this regard.

Dr MANOJ LAMBA, Kurukshetra

Baisakhi: no holiday

Baisakhi (April 13) is an auspicious festival for the people of Punjab. But it was not declared a holiday under the Negotiable Instrument Act, 1881. As a result, banks were open on that day. Great significance is associated with this historic day when Guru Gobind Singh founded Sikh Panth at Anandpur Sahib in Punjab for the welfare of mankind. Consequently, this great day calls for a special reverence highlighting the Great Guruís exemplary deeds.

Banks employees belong to an orphanage which is neither governed by the State nor the Centre. They do not know whom to approach for the redressal of their legitimate grievances.


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