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Courage to Collect VAT/Sales Tax

12/5/2012 2:07:15 AM Filed under Politics.
Posted by J.D.

Courage to Collect VAT/Sales Tax-Posted By: J.D.

It is said that seven-eights of goods sold in India are bereft of proper tax collection processes.

The beneficiaries are the tax collectors and the shop-keepers. The customer may sense an immediate gratification by a moderately reduced cost from the Maximum Retail Price allowed (as in the case of hardware items) and be unconsciously pulled into this circle of social evil. At times, such as in the case of chemists, the prices are rounded up to over the Maximum Retail Price. Charging a customer in excess or the MRP is a crime. The returns to the shopkeeper are enormous and a double whammy to the consumer and the exchequer. On the one hand the cost levied is rounded up over the MRP and on the other, the goods have been under-invoiced in so far as GST/VAT/Sales tax was concerned.

Why should the consumer pay the MRP (or over the MRP) and still not demand an invoice. Ingrained, social evil?

Social evil? - If the state and central governments could or rather, would collect the due taxes, there would be sufficient funds for a whole gamut of schemes. For example. Transport connectivity could be enhanced 100-fold and made practically free - thus triggering a domino effect with reduced fuel bills to the citizen and to the country. And there would be plenty of funds for more and more such schemes. Therefore cutting into the tax collected by the administration boils down to a social evil.

How many of us have painted our houses - say at a total cost of Rs 40,000.00 (USD 800.00) out of which, half has gone towards the cost of material. How many of us have demanded an invoice from the shopkeeper? How many of us are happy to get a few percentage points down from the MRP and damn the country? If only we'd open our eyes to the fact that the money thus stolen has made us poorer.

Will any of the political parties show strength of conviction to enforce full collection?

Reason will tell you that a portion of the monies lost will find their way to the law-makers/enforcers and therefore the prospect is bleak.

Therefore, in some countries, there is opposition to the entry of foreign direct investment in retail. With FDI in retail, there will be more stringent control over the taxes while at the same time providing a better and cheaper service to the producer and consumer due to elimination of the middleman and kickbacks to the tax officials -> upwards to the political class. This will take a rare conviction and courage to implement.

Your comments are welcome.

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Reader Comments: 3


Anonymous from IP 212.59.111.132 Says:
The Indian government has recently demonetized large denomination notes (?500 and ?1000) supposedly to crack down on black money. It is hoped that in one stroke, illegal funds will be removed from the system. Something to that effect would be achieved if all the loopholes are blocked fairly to all persons, entities and organisations from within and outside the country. What the move does not address is the regeneration of new unaccounted-for funds, to boot in new, legal tender of easier-to-carry denominations (?2000). It also does not address the fact brought to light in this post which revolves around the rampant process of under and over invoicing. Surely the successive governments, including this one, are aware that this practice is the biggest ill in India??
	11/13/2016 8:04:40 AM


Anonymous from IP 204.125.16.20 Says:
High Court awards 1 year rigorous imprisonment to trader for evading tax. How about the same for the sales tax officials who collude with traders?
	8/13/2013 12:53:20 AM


Anonymous from IP 122.179.141.144 Says:
Starting with premium cities, the law should prohibit sales of consumer goods by cash transactions. All vendors should be able to sell goods only by means of smart cards. The smart card in lieu of cash must be gradually used for almost all consumer transactions including simple transactions such as for food & beverages purchases at restaurants. All smart card machines should be connected to VAT/GST bifurcating software in real time.
	12/15/2012 9:38:32 AM

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