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Meltdown takes toll on VAT collections in UT
January, 10th 2009

Economic slowdown seems to have forced city residents into reworking their household budgets, as indicated by a dip of over 30% in value added tax(VAT) collections on sale of costly goods during the year-end festive mood in 2008.

According to figures compiled by UT excise and taxation department, sales of electrical appliances in Chandigarh registered a drastic decline as compared to 2007. Similarly, people put off plans to buy new cars in 2008-end as revealed by a dip over 25% in VAT. Total tax collection in October reduced to Rs 5 crore, sources said.

Even though sales of automobiles do go down every year-end as buyers prefer to wait for the date of purchase to be in the New Year to get a new series registration number and better resale value, the sales were better in 2007 as Diwali fell in November and festive buying persisted, an official said. With plans to construct or furnish houses being shelved, sales of sanitaryware, besides marble, also came down substantially. Tax collection from costly furniture has also nosedived in the city and sales were expected to improve in the coming months, the official added.

Interestingly, despite the discouraging trend, total tax collection of the department for the financial year 2008-09 is witnessing an upsurge so far. From July 1, 2008, all VAT returns are being received through the Sampark centres. Previously, receipt of VAT returns was handled by the department itself but due to shortage of staff as well office space, there used to be huge rush of visitors in E and T office, he said.

Receipt of returns was being handled manually, which resulted in delay in encashment of cheques. It was difficult to compile the tax collections for each ward separately and ascertain the increase/decrease in tax collections. Moreover, there was difficulty in monitoring the dealers, in the absence of records relating to return defaulters, he said.

Also, an awareness campaign has been launched through the media wherein consumers are educated for forcing dealers to issue bills/cash memos so that tax compliance can be improved further. Similarly, tax enforcement has been strengthened. Roster has been prepared whereby two ETOs along with their supporting staff are on enforcement duty daily.

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