Jammu traders protest against VAT

Following the announcement of an increase in value added tax (VAT) from 5% to 13.5.% on IT peripherals, the IT business in Jammu and Kashmir has completely come to a halt. Traders have stopped raising the invoices of those items which have gone un-specified due to the repercussions arising out of SRO 108 and 122 by finance department.

In the issued circular to all the traders, the Sales Tax department has indicated slashing of VAT from 5% to 0% on desktops, laptops and palmtop computers, etc. At the same time they have categorized IT peripherals under 13.5% category. The local Jammu Computer Dealers Association (JCDA) is protesting against this unfair stand of Sales Tax department.

Commenting on the ongoing confusion, Arvind Koul, president, JCDA asserted, "The SRO issued by the Finance Department erroneously removed computer and peripherals from the existing 5% category and added a few listed items in 0% category, thereby creating a confusion with regards to the left-over items. Such unspecified items automatically fell under 13.5% category."

Ever since this issue has popped up, JCDA has been running pillar to post to get clarification from various departments like Sales Tax, Secretary Finance, Deputy Secretary Finance, Commissioner Commercial, Finance Minister J&K and Chief Minister. But the association has not received any concrete decision from the authorities. During the meet, the Sales Tax authorities articulated that the the left-over items from the category will attract a VAT @ 13.5%.

Koul also added, "When we contacted Deputy Secretary Finance, he commented that it was an unintentional mistake and it would be rectified only if Commissioner Commercial Taxes confirms the same."

Meanwhile, the Sales Tax department raided many traders and forced them to attract 13.5% VAT rate on left-over items such as copier, printers, hard drive and other IT peripherals from April 1 onwards. Fearing further inspections, JCDA called a complete bandh of all the members of JCDA and other distributors protested and marched towards Sales Tax department. An appeal to Finance Minister was also being given in a newspaper.

"Although, the additional commissioner assured the association that the Sales Tax department will not carry any raid till the matter is resolved. We are not ready to accept this sudden surge of VAT @ 13.5%. We want the department to either charge 5% or 0% VAT on all the IT peripherals. Till then, we will not allow any sale of IT peripherals," said Koul.

The association is hopeful that the department will roll back the increased VAT by next week. Presently, the secretary and government is operating in Srinagar and hence the next session will be resumed in Jammu by the second week of May.

Koul also shared, "Unless the department take any decision, we are afraid the Jammu market will see an advent of cross-territory trade of goods, supply of grey products and outflow of material without taxes and bills. It has been more than a month that our sales have been hit as we are not billing and selling the unspecified items. Peripherals are important to maintain our bottomlines. Due this confusion, the bottomline has gone almost flat," concluded Koul.