UP gets VAT, but channel is confused

With the beginning of the New Year, the value-added tax (VAT) regime has
come to Uttar Pradesh. There is a mixed response from the customers as well as
dealers with regard to acceptance of the new taxation system.

Since the taxation is new to the state, IT dealers are clueless about the
complete details of VAT in terms of its classification. In cities like Allahabad,
customers too are reportedly apprehensive about accepting products that come
with a VAT bill, which has resulted in slowdown in their buying levels.

“The market has been slow since Diwali and dealers in Allahabad were hoping
that it will pick up again with the beginning of the New Year. But since VAT has
been imple­mented around this time, the market is absolutely cold. There has
been a decline in the purchasing interest of customers and those who come, delay
their decision on hearing the name of VAT. They become reluctant to buy a
product under VAT,” informed Manish Mehrotra of Tritech Enterprises.

In Ghaziabad, dealers opined that the problem is not arising from the
customer's end but on dealers' front, as there is not much knowledge about VAT
with regard to the criteria of taxation under this system. Moreover, channel
partners are finding it difficult to get in touch with the right authority in
government who could assist them in explaining the entire term.

“There is no body to help the dealers about the basic informa­tion. Even the
sales tax representatives of Income Tax Department are not aware of the full
information of VAT. We have asked an advocate to give us detailed information
about VAT,” shared Rajesh Gogia of Sun Systems.

However, dealers in Ghaziabad are not facing any slowdown in the market. But
Harsh Batra of Classic Com­muni­­cations did mention that customers are
partially apprehensive about VAT, though this has not affected their buying
decisions.

“Since there is not much clarity about VAT, there are certain doubts and
confusion among dealers is well as customers. But this is a normal reaction and
it will take some time to be accepted well. VAT has been successfully
implemented in rest of the states and likewise it will be effective in UP also,”
Batra commented.

Several dealers opined that it would take around three months for customers
and partners to get accustomed to VAT. Himanshu Kohli of Kanpur-based Comexcell
Technologies maintained, “VAT is an absolutely right thing and will be very
successful in UP also, as customers are showing a positive approach to the new
taxation system.”