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Monday, Dec 30, 2002

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Educate public on VAT

It is sad to know that traders and industrialists in Uttar Pradesh are protesting against Value Added Tax (VAT). These protests are taking place because they do not have enough knowledge about VAT.

The officer bearers of trade bodies, tax consultants and the political class should educate the masses about VAT. The VAT taxation regime is in the larger interest of the consumer, exchequer and above all the trader.

Most traders also have a narrow mindset to try new tax systems, as they are against the cumbersome tax regime and inefficient administration. Existing tax collection systems of the Central and State governments are bursting with litigation, corruption and harassment.

The Prime Minister himself acknowledges that "inspector-raj" is the biggest hindrance to industrial development. VAT will reduce inspectors as it encourages self-assessment of the sales tax payable.

The traders should re-examine their agitation and understand that the registration in VAT will reduce their transaction costs and increase profit margins, if they maintain truthful and transparent accounting records. Further, the Centre should strive to increase the credibility of tax officials. Above all, VAT is the only trader-friendly international accepted tax system.

Sushil Mehra

Bangalore

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