VAT confusion mounts, CAMS to approach government

DQW Bureau
New Update


With the channel community in Tamil Nadu in quandary over the 12.5 percent

VAT that has been levied on toners and cartridges it has now come to light that

the Manufacturers Association for Information Technology (MAIT) was informed by

the Tamil Nadu tax department about the hiked rates of VAT applicable on

cartridges and toners.

The DQ Week contacted a high-ranking official from the commercial tax

department of Tamil Nadu for clarification. The official on condition of

anonymity said, “Tamil Nadu VAT Act—first schedule—part B clearly mentions that

toners and cartridges are excluded from the four percent tax, which means they

will attract a 12.5 percent VAT. It does not make sense to levy four percent tax

on a product that already attracts 12.5 percent.”

In fact the official also shared that the VAT cell had sent a letter to MAIT

clarifying the reasons why toners and cartridges attracted higher VAT. TA Jacob,

Commissioner of Commercial Taxes had written a letter to MAIT about the same.

MAIT had earlier insisted on a clarification on the rate of tax for toners and

ink cartridges.


The reply letter from the commissioner clarifies that inkjet cartridges and

toner cartridges are taxable at 12.5 percent with effect from January 1, 2007.

However, channel partners complained that this was not communicated to them and

hence they continued with four percent VAT.

Compounding the confusion is a February 2008 injunction taken by Canon India

from the Madras High Court against levying VAT higher than four percent. The

order restrains the appropriate authorities from taking any further steps to

recover tax in respect of sale of printer cartridges at a rate higher than four

percent. It was mentioned in the court that it is not possible to use printer

cartridge without a computer.

When contacted about the existing confusion Ravikumar, President, Computer

and Media Society (CAMS) , who seemed to be aware of the government's stance,

said, “We are in discussion with Confed-ITA and will take an appropriate

decision that will protect our members.”

PN Prasad, President, Confed-ITA, said, “This is not an issue that is

affecting just one channel partner, therefore, a collective effort is needed and

we are working towards it.”