Punjab’s traders will have to submit online their entire business transactions details — inter-state or intra-state sale under statutory Forms C,D and F—as the state government is set to replace the “corruption breeding” practice of only accepting original copies of the statutory forms.
Behind the move, touted as a “reformist step on the anvil”, are twin targets — plug tax leakages and stop harassment of traders by curtailing interaction with the excise and taxation department.
Top government sources say the move has been approved at the political level and that a notification to make necessary amendments in rules will be issued very shortly.
Current tax dynamics
According to government records, there are 1.44 lakh registered traders who pay ‘zero’ tax while there are many who have been getting away by paying less tax.
Punjab has 2.49 lakh registered traders and 1.86 lakh of these show a turnover of less than Rs 1 crore.
Of the total registered traders, 2.17 lakh paid less than Rs 1 lakh per annum as tax in 2013-14. Only 1,063 traders pay more than Rs 1 crore as tax per annum, contributing 85% of total VAT collection.
After the notification, apart from furnishing a copy of trading account, profit and loss account and balance sheet—a practice followed earlier also — every taxable trader will have to “submit online the details of statutory forms.”
The government has decided to do away with the requirement of statutory declaration in Form D and other relevant forms under Central tax Act, 1956.
According to the approved draft of the notification (HT has a copy), traders will not be required to submit in physical form the original copies of statutory forms. “However, the trader will be required to retain these and furnish them at the time of assessment or as and when the department requires,” states the draft of the notification.
The records, submitted in original, by the traders used to be lost at times due to poor record-keeping by the excise and taxation department. Now, not only the traders will keep original documents with themselves, but can also update the details of their business online. This is expected to save traders from frivolous assessment as well as the harassment of visiting excise department officials to deposit records.
“This decision is likely to cause unease among those committing frauds, while it will be a relief to honest traders,” an officer said.
This amendment in the Punjab VAT Act comes close on the heels of deputy chief minister Sukhbir Singh Badal, who also holds the excise and taxation department portfolio, withdrawing a Cabinet approved amendment in VAT laws that was also aimed at plugging tax evasion by registered traders after the ruling Akali Dal’s ‘trader-friendly’ alliance the BJP had mounted pressure.
In October 2013, the Cabinet had given its nod to amend Section 13 (1) of the Punjab VAT Act, 2005. The amendment provided that “input tax credit (ITC) would not be available as ITC unless such goods were sold within the state…” The idea was to check tax evasion due to bogus billing.
Primer on TAX
2.49 lakh Registered traders in the state
1.86 lakh Report turnover of less than Rs 1 crore
1.44 lakh Registered traders who pay no tax
2.17 lakh Paid less than Rs 1 lakh per annum
1,063 Traders pay more than Rs 1 cr as tax per year