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VAT problems plague North India : 1.5% increase in Rajasthan

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DQW Bureau
New Update





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Unveiling of the state budget by Rajasthan Chief Minister, Ashok Gehlot has

stirred the sentiments of sub-distributors in the region. In the budget, the

government has increased VAT on all the products under the bracket of 12.5 to 14

percent. IT products that would now be taxed at 14 percent are consumables,

multi-functional products, projectors and its accessories and software licenses.

Another worry for sub-distributors in Rajasthan is that the VAT on all these

products is only four percent in Delhi.

The proximity of Jaipur to Delhi pulls resellers and end customers to buy

products from Delhi where the VAT which is much lower as compared to that in

Rajasthan, and this is further going to create an impact on the distribution

business in the state.

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“The government had already levied 12.5 percent VAT on some of the IT

products, which was much high as compared to Delhi. Now, further enhancements in

those segment is surely going to create a threat for the sub-distributors in

Jaipur, Udaipur and other regions. Because of the price difference, resellers

and end customers prefer to buy the products from Delhi, which is close by. This

kills the sub-distribution business in the local areas and the government is not

realizing this,” commented Manish Aggarwal of Jaipur-based Kanchan Computech.

It is being reported that even the corporate buyers in Rajasthan prefer to

purchase products from Delhi instead of the local dealers because of the

difference in VAT.

Earlier, vendors like HP had been giving tax benefits to the partners in

Rajasthan. But because of the government's decision to further hike the rate and

looking at the current market scenario, vendors have refused to provide any

further relief.

Rakesh Aggarwal of Krishna Computech, Jaipur, who deals in consumables, added

that the hike in VAT in Rajasthan would create an estimated loss of Rs 10 crore

per month at the sub-distributor level.

The announcement of increase in VAT has been implemented with immediate

effect. However, as the government is itself a potential buyer of IT products in

the state, any increment in VAT is going to hit them as well.

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