2 per cent tax on every purchase by government departments

In an attempt to boost revenue collections, the AAP administration is all set to impose two per cent tax on every purchase made by all government departments in the national capital. The government is going to make two per cent tax deduction at source (TDS) on all purchases it will be making in the near future. A bill to this effect is being formulated by the government, which it intends to table in the upcoming Budget Session of the Delhi Assembly.

The main idea behind the deduction of TDS on all purchases is to ensure that all traders and dealers meticulously end up paying VAT on each good they supply to any government department. Once the proposed “VAT Amendment Bill” is passed, it will help the administration to keep a tab on the sale of goods of all vendors and dealers in the city.

The government is said to have decided to tax all procurements it makes from dealers and vendors following reports that many departments had been making purchases from unregistered suppliers. Some departments had even been procuring goods from dealers outside the city, which is in clear violation of the rules.

A senior officer said that once the bill is passed, all the departments of the Centre and state administration and other Public Sector Undertakings will be bound to first pay two per cent VAT on any purchase they will be making in the city. “The new bill is bound to boost the revenue collections of the city government by Rs 300 crore every year.” So far, 442 government departments are said to have filed their returns. The government has already issued a notification asking all entities of the state and Centre having offices in Delhi to furnish an online quarterly return of purchases made by them from registered dealers.

The move is aimed at catching those dealers who evaded Value Added Tax (VAT) as well as bolstering collections in the last financial quarter. The government is also issuing a public notice to build awareness in this connection. A senior bureaucrat said all the government entities will have to enrol themselves on the VAT department website (www.dvat.gov.in). Basic information has to be filed online in Form GE-I.

“The return should be filed on a quarterly basis in Form GE-II by the 28th day of the month following the quarter to which the return pertains,” the notification said. “To begin with, the returns for the first three quarters of financial year 2015-16 are required to be filed by February 15, 2016.”

“With this move, we will have information about dealers selling items to government entities. If anybody evades VAT, they would be easily identified and one can take action against them as well,” an official said.