Press Releases: Karnataka seeks Rs 700cr. to make up for VAT loss - GIRISH RAO


BANGALORE: Karnataka is seeking Rs 650-700 crore as compensation for the loss of revenue from the implementation of the value added tax (VAT) programme in the state for ’03-04.

The state’s commissioner for commercial taxes, Ashok Kumar Manoli, told ET that Karnataka, along with Tamil Nadu, has asked for some advance relief to be adjusted against the actuals. Besides, most of the states have also sought monthly release of the payment as against a quarterly plan.

The Centre is committed to make good the entire loss incurred by the states in implementing VAT till such time that the trend is reversed and the taxes become revenue positive.

While, the annual grants will be calculated on the basis of actuals plus a five-year average of revenues and the estimated loss through VAT implementation, compensation will be total.

For instance, Karnataka has estimated that it would have lost Rs 580 crore in ’01-02 from VAT implementation. Total commercial tax revenues in that year was pegged at Rs 6,304 crore. This year, it expects revenues to grow by 5% while in ’03-04, it is looking at pushing up the earnings by another 5-6%.

Meanwhile, Karnataka is bang on target with the milestones set for the implementation of VAT from April 1. Since computerisation is key to the success of the VAT regime, the state government has sanctioned Rs 47 crore for it.

Mr Manoli said three major agencies are involved in helping the state to gear up for the VAT regime. CMC is advising the sales tax department on system software, site preparation, training (1,200 personnel being trained), hardware procurement and local area network implementation. The wide area network, linking the sales tax department’s LVO (local VAT officers) and VSO (VAT sub-officers) posted in different zones and districts, is being supported by STPI.

Crown Agents of UK is training the trainers, developing the application software and supporting the communication processes, basically holding the department’s hands till the VAT programme is up and running. S Sadagopan and his IIIT-B team is also helping in customisation of the software to suit local needs.