West Bengal revenues rise after VAT entry

KOLKATA: The West Bengal government’s problems of tackling a cash crunch seems to have partially eased. As per expectations of the state finance minister and architect of the value-added tax (VAT) Asim Dasgupta, the state’s revenue collections got a fillip in the post-VAT regime, which came into being in the state since April 1, 2005.

Validating Mr Dasgupta’s claim that VAT is a superior tax system than sales tax for states’ revenue generation, West Bengal has generated 17% more revenue in 2006-07, the second year after VAT’s introduction in the state.

Riding on an inherent buoyancy in the collection system, the state has mopped up Rs 3,175.39 crore from VAT in April-January in 2006-07, against Rs 2,717.14 crore in the corresponding period last year.

Introduction of VAT appears to have come as a boon to the state ever since it was introduced here. Despite some teething trouble in bringing all registered dealers and manufacturers under the tax net, the state has realised Rs 3,665.3 crore from VAT in 2005-06, the first year of its implementation.

With this, its total collections from VAT, sales tax and central sales tax has increased 7% to Rs 6,119 crore in the year, against Rs 5,721 crore in 2004-05.

Collections from VAT are expected to touch nearly Rs 5,000 crore by March 31, 2007 with tightening of its implementation in the second year, a senior state government official said. Currently, 550 items have been brought under the tax net in the line of recommendation of the empowered committee on VAT, headed by Mr Dasgupta.

This apart, sales tax at 17-50% are being imposed on a few items including Indian made foreign liquor, desi liquor, lottery tickets and motor spirit. However, there is one flip side to the VAT implementation in the state.

Compared to the buoyancy in tax collection, as per the Act’s guidelines, refund of the tax to EOUs, SEZ units, other exporters and to domestic manufacturers against their excess payment on input tax are yet to begin in the state.