Channel welcomes VAT in UP

Amrita Tejasvi

New Delhi

Oct 24th, 2007

IT traders in Uttar Pradesh have welcomed the government's decision to
implement value added tax (VAT) in the state and are hoping that the new tax
policy will help them in getting rid of paying double taxes.

Sharing his view on the new tax implementation, Amar Kapur, Secretary,
Lucknow Computer Vyapar Mandal said, "We welcome chief minister's decision
to implement VAT in the state. This implementation would allow more
computerization in UP and will benefit the dealers with the increase in sale of
PCs."

IT traders are expecting rise in their business after VAT is implemented as
it would require all the small and big businessmen to prepare computer generated
invoice and hence it will mark increase in installation of desktops across the
state.

"Another reason why the traders are happy about VAT implementation in UP
is that until now all other states were enrolled for VAT except UP and it used
to generate complex feeling for us. We used to felt we lagged behind in the
race," said Udit Kumar, Proprietor of Varanasi based Life Computers.

Kumar further added, "Only those who do not follow clean tax system tend
to get upset by VAT. If you are running a transparent business procedure, there
is no need to worry about it. Traders might agitate on the pretext of
complicated updating procedure in VAT that is all baseless. It takes some time
to learn the process."

Ajay Grover, proprietor of Meerut based Foretek Systems added, "VAT is
problematic for those only who operate in black market. It would affect the
dealers who are into gray market business. There is no problem with VAT as I
have offices in Uttaranchal, New Delhi and Haryana where VAT is already
implemented and I do not find any problem in business there, so there is no
reason for traders to protest."

Dealers also disclosed that once VAT gets implemented it would put a block on
all the resellers who get stock directly from New Delhi instead of buying from
the sub-distributors in UP. They will now have to do business in a systematic
manner.

"The whole country is running on VAT and it is good that finally it got
implemented in UP also. There is no loss in following it. Moreover dealers will
get the benefit by getting rid of paying double taxes here," commented
Piyush Jain, Proprietor of Kanpur based Well Known Computers.

"Whatever decision government makes has to be followed by trade body and
there is no alternation to it," shared Sanjay Jain, owner of Gorakhpur
based Jalan Distributors.

Value Added Tax (VAT) was introduced in Indian Taxation System from April 1,
2005. It is a general tax that applies, in principle, to all commercial
activities involving the production and distribution of goods and the provision
of services. It is a consumption tax because it is borne ultimately by the final
consumer.

The mechanism of VAT is such that, for goods that are imported and consumed
in a particular state, the first seller pays the first point tax, and the next
seller pays tax only on the value-addition done - leading to a total tax burden
exactly equal to the last point tax.