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Plan panel points out serious design flaws in VAT

     New Delhi: Giving another significant twist to ongoing VAT controversy, the Mid Term Appraisal of Tenth Plan says there are serious design flaws in VAT. As this report is coinciding with the three-day traders' strike against VAT, it is expected to give rise to another controversy. "There are serious design flaws in the suggested VAT structure. The proposed VAT does not extend to all indirect taxes on goods, as entry tax and octroi will continue," the Plan panel said in the draft Mid Term Appraisal of Tenth Plan. "All in all, the combined incidence of Central and State VAT be close to 30 per cent. It could be higher if we consider taxes that are going to be retained after VAT is introduced," it added. The panel emphasised on the need of lowering down the tax rate. To boost manufacturing sector, it strongly recommends that the effective rate of indirect tax of both Centre and states will have to be brought down to ASEAN level of 10-12 per cent. "High tax burden will keep prices high and dampen demand, particularly in the case of low-income consumers, which is detrimental to the economic growth" it said However, Planning Commission Deputy Chairman Montek Singh Ahluwalia emphasised that VAT is a more rational system and it will benefit all traders, consumers as well as the states. "States that don't adopt VAT would, in fact, be imposing a cost on their own producers," he said, "I can assure that both international and domestic investors setting up new plants, prefer to set them up in states that have VAT than those who don't," added Ahluwalia.

Traders' strike against VAT enters second day (Go To Top)

     New Delhi: Protests by traders against the imposition of the Value Added Tax (VAT) regime that comes into effect in 21 states from April 1 will continue for the second day today. The first day of the three-day strike saw a mixed response. While the big wholesale markets remained shut, the small shops, hawkers, petrol pumps and chemists conducted business as usual. In Kolkata, the anti-VAT traders' strike saw most shops remaining closed. The prices of most commodities have consequently gone up. The worst hit were the prices of fruits and vegetables, registering increases of Rs.15 to Rs. 35 per kg in just one day. Medical shops and petrol pumps, however, remained open. Most eateries continue to remain closed despite being kept out of the purview of the strike. One reason for this is that 80 percent of the traders will not be affected by the VAT system as their turnover is less than Rs.10 lakh. While VAT supporters say the new regime will make buying and selling products more transparent, its critics, mainly the traders, say it means more paperwork and harassment. The main concern comes for the middle-level traders, who will now have to pay VAT in addition to the central sales tax. However, their bigger worry is that the new regime will force them to maintain loads of documents and go through a lot of red tape. They say it'll be like going back to the days of inspector raj. On the other hand government argue that VAT is not only simpler and consumer friendly but it will benefit the big traders and wholesalers also. The government has tried to mollify the protesting middle-level traders by implementing a nominal tax of 0.25 percent for incomes between 10 to 50 lakhs rupees. But the traders are demanding that even if VAT gets implemented other taxes like the central sales tax should be abolished. However, the end-consumers don't seem to have quite understood the new tax regime. On the one hand government claim it to be simpler and consumer and trader friendly, traders complain is otherwise. There are speculation of increasing the prices of several commodities once the VAT gets implemented.

US accuses India, others of creating trade barriers (Go To Top)

     Washington: The United States has accused 61 countries including India, China and EU of setting up trade barriers that harm American farmers and manufacturers. In its annual complaint against various trading countries the US allege these 61 countries of following anti-competitive trade practices and keeping tariffs high. The 672-page report is designed to guide American negotiators over the next year in trying to attack barriers seen as doing the most damage to its companies. In a 14-page, closely typed list against India, the report claimed that the country "suffers from slow bureaucracy and regulatory bodies that reportedly apply monopoly and fair trade regulations selectively. With no fear of government action and with a clogged court system where cases linger for years, Indian firms face few if any disincentives to engage in anti-competitive business practices." It also alleges that India has an unpublished policy that favours countertrade. Private companies are encouraged to use countertrade. The Indian Government does try, nevertheless, to eliminate use of re-exports in countertrade. India's tariffs remain remarkably high, especially in the agricultural sector. US producers encounter tariff and non-tariff barriers that impede their exports. The report observe though, American exports continued to grow in 2004, substantial expansion in US-India trade will be unlikely without significant additional Indian liberalisation. However, the report appreciates India's progress in restructuring the tariff in non-agricultural sector.

Kochi gears up for much-awaited Indo-Pak face-off (Go To Top)

     Kochi: After drawing the test series 1-1, India and Pakistan cricket teams are gearing up for the first of the six days to be played between the two countries on April 2 at the Kochi's Jawaharlal Nehru International Stadium. If the two teams are gearing up for the face off, the organisers of the match are not far behind. All the preparations within the stadium are also going on a fast pace. Sitting arrangements, ground and pitch work, security arrangements all are in its final stages at the international stadium. The organizers believe that it will indeed be a historic moment for the city as well as the people to witness a match between India and Pakistan and are expecting that the stadium will be jam-packed. "Preparations are on in full swing. We expect a good batting wicket and this time we have got a wonderful outfield also, lush green and soft and people can play without any worries", said T.C.Mathew, match convener. Tight security arrangements have been made for the one-day match between India and Pakistan, to be held at the Jawaharlal Nehru International stadium on April 2 in Kochi city. About 2400 police personnel will be posted to control the traffic as well as the spectators. Spectators will not be allowed to carry plastic bottles, matchboxes, cigarettes, placards and food packets into the stadium. "The kind of security, the kind of attention which is given, thousands of policemen will be deployed in the stadium premises. All routes, all sensitive areas will be covered", said Dinendra Kashyap, City Police Commissioner, Kochi.

     The Jawaharlal Nehru Stadium is the second largest stadium after Eden Gardens in Kolkota city in terms of sitting capacity. "This is going to be a historical occasion and we feel that the entire stadium will be jam packed. We expect about 85,000 to 90,000 people. The stadium in its capacity is second to Eden Gardens in Kolkata which has got an estimated capacity of a lakh spectators", said S.K.Nair, the General Secretary of BCCI. Both the teams will be arriving by this afternoon (March 31) at Kochi. Kochi staged its first official one-day match during the Pepsi Triangular series between India, Zimbabwe and Australia. The only other ODI played here was during the South Africa tour of India in 2000. India and Pakistan have never faced each other on the ground before. In the first match played at the stadium on April1, 1998, India defeated Australia by 41 runs. India again defeated South Africa at the same venue by three wickets on March 9, 2000. In the last match played at the venue, India versus Zimbabwe, on March 13, 2002, India lost to Zimbabwe by 6 wickets.

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