Note ban has no impact on VAT collection

New Delhi: Contrary to the perception that revenue generation of the AAP government has been hit after demonetisation  drive, the Value Added Tax collections from

November 9 till November 17 in the national capital have almost remained the same in comparison to the collections made during the same period  in 2015. But reports do suggest that sale of liquor which had dropped by almost 40 per cent  on the first day of demonetisation was gradually picking up in the city.

Most of the city’s developmental activities depend mainly on the buoyancy  and elasticity of VAT, which constitutes nearly 65 per cent of the government’s tax revenue. While the government got about Rs 16.19 crore on November 9 through VAT, it was able to collect about Rs 16.29 crore on the same day in the previous year. The VAT collections, which saw a dip of about Rs 8 crore on the second day of demonetisation, went up by about Rs 7 crore on November 12 in comparison to the revenue generated in the corresponding period last year. The VAT collections, which touched a record of about Rs 57 crore on November 16, were about Rs 38 crore in the previous year.

But the VAT collections made post demonetisation are not any indicator of the sale of goods that the traders have made since November 9. Elaborating on this, a senior officer said: “No one deposits VAT on a daily basis. These tax deposits have been made about the goods which have been sold by the traders in the previous months.”

The reason why traders have been meticulously paid VAT is because the government has introduced a series of measures to check leakages in tax collections. The government had already made it clear that it will not spare about 1.50 lakh of the 3.25 lakh registered traders who had failed to deposit their VAT. Also, CCTV cameras had been installed at the entry points of the neighbouring states to ensure that goods entering the city are taxed properly. Even notices had been sent to those traders who had not paid VAT on goods which they had supplied  across the city.

The excise wing of the city administration is also monitoring the sale of liquor in the city. A shopkeeper claimed that on the day one of demonetisation, there was a decline of about 40 per cent sale in different liquor brands. “Now the sale of liquor is picking up. Many customers are using plastic money to purchase their favourite brands,” a shopkeeper in Mayur Vihar Phase I said. “There is also no shortage of supply of any liquor brand.”