Vat 4% to 5% was increased long back in other states- Suresh Chandra, IAS

The Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) and Department of Commercial Taxes jointly organized a Seminar on ‘Ordinance No. 7 of 2011- under AP Vat Act 2005’ on 10^th October 2011 at Federation House, Red Hills, Hydrabad. This seminar was intended to get exclusive information on the recent amendments in Andhra Pradesh Value Added Tax Act 2005.

Mr. Suresh Chandra, IAS, Commissioner of Commercial Taxes was the chief guest for this meeting. Mr. V.S. Raju, President, FAPCCI, Mr. G. Lakshmi Prasad, Additional Commissioner, Commercial Taxes, Mr. Srinivas Ayyadevara, Vice President, FAPCCI and Mr. Nitin K Parekh, Chairman, Trade & Commerce Committee, FAPCCI are the other key speakers at the Seminar.

Mr. Suresh Chandra Chief Guest in his inaugural address stated that the increase of floor rate of VAT from 4% to 5% increased long back in other states. The department was simplified the provisions to the extent possible of the works contract. He further informed that within a couple of days department is framing rules, so that if there is any issues / problems, forward to FAPCCI, so that we will examine the issues and taken into confidence.

Mr. G. Lakshmi Prasad was gave a detailed power point presentation on “Ordinance No. 7 of 2011- under AP Vat Act 2005”.

Overall Effects of Amendments Are

Ø Liquor Sold In Loose form In Bars & Other Places Become Exempted from 01-04-2005

Ø Distinction Between Government Contracts and other Contracts for Composition is Removed

Ø Outside State Purchases and Non-Vat Purchases Made By The Composition Opted Contractors are not Liable to Tax W.E.F 15-09-2011

Ø Sub-Contractors of Composition Opted Contractors are Exempted W.E.F 15-09-2011

Ø Input Tax Credit in Case of Non-Composition Contracts is Reduced To 75% from 90% W.E.F 15-09-2011

Ø Composition Tax of 4% for the Lease Transactions W.E.F 01-04-2005.

Ø Composition Tax of 2.4% on the Printing Contracts W.E.F 01-04-2009.

Ø Selling Agents of Agriculturist Principals are Exempted W.E.F 24-09-2008.

Ø Payment of 12.5% of Penalty and Interest also While Filing Appeals before Appellate Deputy Commissioner W.E.F 15-09-2011.

Ø Rate of Interest is increased from 1% to 1.25% W.E.F 15-09-2011.

Ø Rate of Tax on Schedule IV Goods Increased from 4% to 5% W.E.F 14-05-2011

Ø Rate of Tax on Tobacco Products are Increased from 14.5% to 20% and Shifted to Schedule VI

Mr. V.S. Raju said that the recent increase of Schedule IV Items from 4 to 5% w.e.f. 14/9/2011, FAPCCI felt that this would have a direct impact on food grain prices. The persistent high food prices, much higher than the general inflation, have eroded the purchasing power of the public across all income classes. Any increase in tax rates would further burden them. The record growth rate of 30% in tax revenues during 2010-2011, the industry is expecting some radical steps such as restoration of Input tax Credit on certain industrial inputs withdrawn earlier and exempting all food grains from levy of VAT on par with all the other states.

Mr. Nitin K Paresh stated that long back a committee was constituted to study on works contract and made their recommendations 14 months back, now the Government has incorporated the changes in ordinance. The seminar is to know about the intricacies of the amended provisions.

Mr. Srinivas Ayyadevara concluded the seminar with the vote of thanks.