Northern comfort

The northern state of Jammu & Kashmir has taken pole position in the recent review of VAT (value-added tax) collections by the states for the six-month period ended October 2007. J&K has clocked a growth of 42.14 per cent over its previous year’s collections followed by Andhra Pradesh (36.52 per cent) and Karnataka (34.46 per cent).

An interesting sidelight: Bihar, with a growth of 30.81 per cent, has outperformed Gujarat (30.07 per cent). But both are above the national average of 23.26 per cent, along with Kerala (24.41 per cent). All the other states including Delhi, Maharashtra and Haryana figure below the national average. Even West Bengal, whose Finance Minister Asim Dasgupa heads the Empowered Committee of State Finance Ministers, finds itself at the bottom with a 16.01 per cent growth. The figures were revealed at the recent meeting of the Empowered Committee in Delhi.

According to tax experts, J&K’s performance cannot be compared with that of the other states in view of its narrow tax base, which may be one fifth the size of Andhra Pradesh or Karnataka.

They also point out that only Karnataka gives a refund of excess input tax credit to dealers on a monthly basis without any conditions. Other states do not have a monthly refund system and provide refunds only against the bank guarantees or other securities from the dealers.