Chandigarh, December 15
Improving its fiscal health being the prime concern for the Haryana government, the state is now trying to mobilise additional resources by improving its Value Added Tax (VAT) collections.

Bogged down by high debts and heavy market borrowings, the state is now leaving no stone unturned to realize more funds through VAT - which contributes almost 60 per cent of the total revenue for Haryana.

However, slowdown in economic activity across the state is stalling a good growth in VAT collections. Also, VAT has either been reduced or exempted on several items like petroleum products, insecticides and pesticides in a please-all bid by the Bhupinder Singh Hooda government during its last tenure. This has ensured that the level of VAT collections in the state have almost reached a plateau.

Official sources in the Excise and Taxation department informed TNS that this year they had been given a target for 37 per cent growth in its VAT collections. As against the VAT collection of Rs 7,140 crore in year 2008-09, the department has been given a target of earning Rs 9,825 crore through VAT. “However, with the third part of the fiscal now coming to a close, the state is witnessing a mere 6.7 per cent growth in revenue through VAT. The VAT collections till October this year stood at Rs 6,410 crore, as against Rs 6,002 crore in October 2008. Though the figures for November are now being worked out, there is not much growth in collections,” said a senior official.

Officials say they are now contemplating harsh measures to increase the VAT collections. “It is proposed to increase the slab of VAT from 4 per cent to 5 per cent and from 12.5 per cent to 13.5 per cent on several items. We have also amended the VAT rules wherein input credit will be given only on actual sale of goods. It had been a practice with traders to not show the actual sale so as to avoid output tax liability. By amending these rules, we will be able to curb this malpractice to a large extent,” he said.

It is learnt that the state is also looking at a rise of 8 to 10 per cent in its excise collections. Though the excise collections have shown an increase of almost Rs 600 crore (Rs 1,521 crore in November 2009 as against Rs 982 crore in November 2008), the government is now thinking to amend the excise policy to maintain a growth of 8- 10 per cent in the next fiscal.