The VAT regime:A year after

One year after has the VAT regime remedied the anomalies that
it had promised to do? Or are there still many issues to contend with? This was
essentially the subject of discussion when the Association of Information
Technology (AIT), hosted a meeting with the commissioner of commercial taxes, P
Ravi Kumar and the IT dealers of the state in Bangalore.

In addition to commemorating the completion of the first year
of VAT regime, the meeting was to serve as a platform to help the dealers
express their apprehensions and clarify their doubts on various matters like
product classification, applicable tax rates on some IT products and the
relevance of the VAT implementation to services and work contracts.

From left to right: Nagesh S, former President, AIT; Anand Rao - President, AIT; Sridhar R, Secretary, AIT;  P Ravi Kumar, Commissioner of commercial taxes, Arun Kumar, Commissioner and Harish Kumar Shetty, Chairman, Binary Systems, Bangalore

Dealers asked the commissioner why many IT products had been
left out of the HSN code list for products taxed at 4% although when the VAT
regime was established in April last year, the Empowered Committee (responsible
for governing VAT implementation in the country) was supposed to declare that
all IT products and telecom equipment under one slab.

What affected the traders most was that many of these products were to be
included under the 12.5% tax regime, in spite of them being core IT products.
Reacting to their concerns, the IT commissioner promised to look into the
anomalies and indicated that issues pertaining to products, especially
networking product classification could also have arisen because of the fact
that evolution of new technologies has added to newer products which still need
to be classified under IT products.

SUBBALAKSHMI BM