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Value Add — Budget 2004


The value added tax is to unified to a single 15 per cent rate from January 2004, from the current 10 and 20 per cent, while the government has abandoned plans to bring wholesale and retail trade into the VAT system.
Finance Minister K. N. Choksy says 70 per cent of the VAT revenue now comes from the 20 per cent band, and the dual system is eroding collections because of excessive refunds.
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rnHe also says the dual rates distorts pricing.rn

rnTurnover threshold for VAT will be increased to Rs 750,000 from Rs 500,000 per quarter while the annual threshold will be Rs 3 mn.rn

rnThe government is expecting to launch a publicity campaign to educate the public on the prices of goods that should come down.rn

rnThe governments earlier stance of hiding the tax charge from the public, by preventing VAT charges from being separately shown in invoices will prevent the automatic reduction of prices, allowing enterprises to keep prices high if they wished. rn

rnA similar situation occurred when turnover ta

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