Extracts of Tax Proposal in Goa’s Budget for 2013-14

Chief minister Manohar Parrikar who is also the minister for finance to present Goa’s budget for 2013-14 on 18th March 2013.

Extracts of Budget Speech on VAT,  Luxury Tax, Entry Tax & Entertainment Tax

1.         Speaker Sir, I now turn towards the tax proposals for the year 2013-14.

The various schemes and interventions towards the growth and progress of  the people of our State, needs adequate financial support, and this is possible by means of innovative revenue generation schemes as well trying to plug the leakages in the revenue flow. The financial revenue collection system needs to be balanced and managed prudently, which I intend to achieve during this fiscal. Revenue enhancement by means of taxation is proposed to be achieved without taxing the people, who are already burdened with rising prices, but by rationalization of various available resources.

Value Added Tax

2.         Speaker Sir, the dealers from the rest of the Country alongwith the local dealers conduct various exhibitions-cum-sale, in different parts of Goa. Most of the time, these are organized by a third party, who actually do not conduct a business of sale or supply of goods, but make all the arrangements for conducting the exhibition. In order to fix a liability on the organiser’s who conduct such events or programmes; I propose to amend the provisions of the Goa Value Added Tax Act, 2005, with a provision for special liability of the persons organizing or conducting such exhibitions-cum-sale.

Further, it is proposed that for every such exhibition, prior permission from the Commercial Tax Department would have to be obtained and advance deposit will be taken from the prospective non-registered dealers, which will be adjusted later against sales details. This will however not be applicable to the registered dealers and recognised Self Help Groups selling their own products.

3.         Presently, in terms of the provisions of the Value Added Tax Act, any notification issued under section 5 takes effect prospectively. However, sometimes it becomes necessary and expedient to give effect to such notifications, retrospectively; so that, the intended beneficiaries are not put to trouble during the assessment process. I therefore propose to amend the provisions of section 5 suitably.

4.         Speaker Sir, it is observed that many a dealers under composition scheme fail to file their application for renewal on account of their pre-occupation with the business; so also, there is confusion over determining the annual turnover. To remove this difficulty and to assist this small dealer, I propose to amend the provisions accordingly. I also propose to enhance the fees for application for composition to 500/- only.

5.         Sir, it has been brought to my notice that the dealers claim benefit of Input Tax Credit (ITC) against tax invoices which are of higher value, than the actual sale invoice made out by the dealer during sales. This leads to higher refunds and therefore Assessing Authorities are reluctant to admit such claims. I therefore, propose to amend section 9 of the VAT Act to take care of such claims.

6.         Sir, the input tax credit in terms of clause 9 of the Goa Value Added Tax Deferment cum Net Present Value Compulsory Payment Scheme, 2005; is availed by the unit in terms of Restrictive Tax Invoices. It has been brought to my notice that many units are not issuing such invoice in the prescribed manner and are therefore denied the exemption benefit. I therefore, propose to amend the clause 9 of the NPV scheme to introduce the Restrictive Tax Invoices which are pre-authenticated.

7.         Sir, I propose to amend the existing provisions of registration under the Value Added Tax Act, 2005 so that the dealers will be made more responsible and liable to renew his registration periodically as a compulsory measure. As regards the provision of levying interest under the Value Added Tax Act, 2005; for non-filing of returns and non-payment of tax, against such disclosure; there is a need to amend the existing provisions of section 25(4); which will done by an appropriate amendment.

8.         Sir, a dealer is authorized to collect VAT and pay it in the Govt. Treasury within a stipulated period. Though, the dealer collects the tax, he does not pay within the period and they utilize the money in their business activities. The provisions of remission of interest and penalty under section 25(4); appears to be encouraging the dealers to default on the provisions of the VAT Act This is not a desirable practice. However, to encourage only genuine cases and to prevent misuse, I propose an amendment with the provision for remission on case-to-case basis, not exceeding 50% of the amount involved, with prior approval of the Government.

9.         Sir, presently under section 28 of the VAT Act, 2005 the tax is deducted at source or TDS, at the rate of 2%. It is brought to my notice that though this deduction at the rate of 2% is quite low, the contractors are purchasing materials without bills from the neigbouring States, thereby depriving the State of its share of revenue. A typical example is that of sale of cement in border areas. I therefore, propose the rate at 5%.

Sir, I wish to state that the benefit of various tax schemes as also other beneficiary schemes of the Government shall be extended only if the billing is done locally against local purchases only. For the contractors executing works of the Government, who do not carry out purchase from local dealers, will be charged higher entry tax.

10.       Sir, in order to encourage local trade and industry, I propose to issue a Notification, that for the purpose of comparison of price for any Government Tender, the rate of VAT and Entry Tax shall not be accounted. This step will help in clarify the confusion created by Audit remarks. Both the taxes are revenue to the State and the Government encourages purchases in its Departments from local dealers, subject to being the lowest, but before charging of VAT.

11.       Sir, it has been brought to my notice that, if any fraudulent claim of excess or wrong Input Tax Credit (ITC) or skipping of turnover etc. is noticed beyond prescribed limitation period of assessment or re-assessment; the Department cannot proceed to deal with such cases. There is also a need to fine tune the other provisions of assessment as well as reassessment to make it more useful and effective. I therefore propose to amend these provisions suitably.

12.       Sir, these days we have seen the increased trend of casual traders who do not have any fixed place for business activity. It becomes difficult, to keep a watch on his selling activity, as well as, to assess the dealer to determine his actual liability. It is therefore felt necessary that new provisions, need to be introduced so that such dealers can be assessed on the spot, at site, based on the factual position as noticed or noticeable by the Commissioner under the VAT Act.

13.       Speaker sir, it is found that many traders who sell taxable goods do not register with the Department. It will be ensured that everyone, who comes within the taxable quantum, will be compulsorily registered. As far as possible, they will be covered under concessional tax payment by means of special schemes to be formulated for the purpose.

14.       Sir, it has been brought to my notice that the Appellate Authority under section 35 of the VAT Act cannot levy a fresh penalty while deciding the appeal. I propose to amend the provisions suitably to grant these powers to the Appellate Authority.

It has also been brought to my notice, that appeal cases under VAT Act are clogged in the Administrative Tribunal and that dealers are filing even appeals in weak cases, with the sole objective of delaying payments of the dues raised during first appeal. I propose to amend the provisions where appeal shall be admitted by the Administrative Tribunal only after 50% payment, of the disputed dues are deposited in such cases.

15.       Sir, it is brought to my notice that the period of three years prescribed under sub-section (1) & (2) of section 39, for revision is not sufficient. I, therefore intend to increase it to five years.

16.       Sir, the penalty provisions for non-filing of returns is fixed at  1000/- per quarter. I propose to reduce it to 500/- per quarter. However, if the dealer fails to file 03 consecutive quarterly returns, the registration certificate shall be cancelled automatically. If required such dealers can obtain a fresh registration with fresh validity after payment of penalty amount of   25,000/-,  in addition to the other regular registration charges. I also propose to amend the provision, to further authorize the Commissioner to examine such similar cases for default in order to either suspend or cancel registrations.

17.       Sir, it has been brought to my notice that sales bills are not issued by the dealers nor are they maintaining proper books of accounts and stock details. There is a need to deal with all such defaulters seriously and impose adequate penalty. I therefore propose to amend the VAT Act, where the Commisioner will be authorized to levy spot penalty of  1000/- on each such incidents. For repeated offences committed, the Registration Certificate can also be suspended or cancelled.

18.       Sir, it is brought to my notice that the existing provisions relating to special powers for recovery of tax, as arrears of land revenue is not so effective, being time consuming. I therefore would like to provide additional provisions by amending section 64 so that the rules are made authorizing the Tax Recovery Officer of the Department to attach and auction the assets on the lines of the provision existing under the Goa Tax on Luxuries Act, 1988.

19.       Sir, I propose to streamline the Inspection and Audits carried out by the Commercial Tax Department, wherein all the reports would be recorded on serially numbered official printed stationery, duly authenticated by the next higher Authority. This will enable the Department to keep track on the inspections carried out and this will form the basis for initiation of action against the tax violators. I feel such a measure should be replicated in the entire Administration.

20.       Speaker Sir, it has been brought to my notice that a lot of assessed dues are pending due to disputes in various Courts and the Appellate Authorities. I propose to introduce a one-time settlement scheme, where the dealer will have to pay 50% of the disputed amount and withdraw the appeals so filed. This scheme will be announced in April, 2013 and those who file application within a period of three months will be considered for the benefit on case-to-case basis. Cases involving non-payment of tax will not be covered. I propose similar schemes for all such cases covered under various Acts administered by Commercial Tax Department.

21.       Sir, it is brought to my notice that industry is facing difficulties in identifying and notifying the goods used as industrial input and they are put to hardships, until there is action taken to include these goods for exemption. I therefore, propose to give powers to the Commissioner to identify such industrial inputs by inspection, if any, on the individual request of a particular industry; where the clarification or determination so issued, shall be applicable to that industry only.

22.       Sir, this year, I propose to introduce a unique scheme for foreign tourists, visiting Goa, who will be entitled for refund of VAT paid against purchases made in the State of Goa. The VAT refund will be done at the Goa Airport, against valid Tax invoices to be produced by the foreign tourist on their departure, and which are issued during the residency period of the said foreign tourists. An appropriate scheme in this regard will be introduced in the forthcoming tourist season from September, 2013.

23.      Sir, last year I had reduced VAT on Aviation Turbine Fuel (ATF) from 22% to 12.5%. To encourage more airline carrier arrivals to the State, I intend to formulate a scheme for refund of VAT on ATF, subject to minimum VAT of 05%, on the basis of progressive increase of passengers by the airline carrier in a year with reference to the base year 2012-13. The scheme will be introduced during the forthcoming tourist season.

24.       Sir, I further propose to introduce a common point sale through web enabled service, where all the dealers are connected online and the details of the sales and purchases are captured seamlessly. To start with, I propose to cover all restaurants and all tourist related establishments under this scheme. This will enable both the dealers and the Department in maintaining accurate records and proper tax compliance will be effected.

25.       Sir, I propose to levy a tax on consideration received or receivable by the builder or developer by way of agreement to sale the flats or housing project or dwelling units or row houses and the like, which are under construction or development. However flats or dwelling units whose agreement value is less than ^ 10 lakhs will be exempted. If the value is between 10 lakhs to 100 lakhs, than the tax will levied at 1% of the agreement value. In cases, where the value exceeds 100 lakhs, the tax will be levied at 2% of the agreement value.

26.       Sir, I propose to modify the entry in Schedule B’ relating to “Handicrafts”, to substitute the same by “Handicrafts manufactured locally”. This will help local artisans in the tax benefits and prevent misuse by non¬entities to the benefit scheme.

27.      Sir, I propose to levy VAT on empty glass bottles at the rate of 12.5% which are used for beer and other like products.

28.       Sir, in order to ensure personal hygiene amongst adolescent girls and young women, it is essential that the price of sanitary napkins be lowered and therefore, I propose to exempt from VAT the items of sanitary napkins and diapers used by babies, young women and old.

29.       Sir, I have proposed to levy a transfer fee for transfer of registration of used cars and two wheelers and therefore, I propose to delete the entry at Sr. No. 142 of  Schedule’B’.

30.       Sir, I propose to levy a VAT on Lubricating Oil at the rate of 15% and to exempt its subsequent sales thereof, subject to certain conditions to be notified.

31.       Sir, I propose to reduce VAT on cement concrete blocks made from local materials from 12.5% to 0.5%.

32.       Sir, I further propose to bring the sales effected by the Depot of Canteen Stores Department and Indian Naval Canteen Services located in Goa to its members, where currently exemption is granted, under VAT, at the rate at 50% as applicable.

33.       Sir, as a measure of relief to the Defence Personnel, I propose to reduce VAT at 50% on cars sold to them.

34.       Sir, I propose to reduce the rates of VAT as well as Entry Tax at 12.5% on luxury cars costing above 15 lakhs and two wheelers costing above  2.5 lakhs.

35.       Sir, the registration fees under various tax Acts administered by Commercial Tax Department, where last revised in the year 2005. I therefore propose to enhance the various registration fees under different Acts upto maximum two times the existing fees.

Luxury Tax

36.       Speaker Sir, I propose to amend the Schedule I of the Goa Luxury Tax Act 1988, by restructuring the existing rates as detailed in Annexure -A.

37.       Sir, I further propose to revisit the concessions granted last year in Luxury Tax payment, and to provide this concession at the rate of 60% of tax liability during the months of June to September of the year. This concession will be valid, subject to payment of tax and filing of returns on time, without any dues outstanding.

Entertainment Tax

38.       Speaker Sir, I am given to understand that the present penalty provision for non-issue of entry tickets for casino entry is not adequate. I therefore, propose to increase it by ten times of the entry fees so charged. So also, as measure of enforcement, I propose to penalize non-possession of entry ticket by any individual who enters the casino, by imposing a penalty often times of the entry fees so charged. This penalty shall be independently enforced on the spot The amendment to this effect will be carried out shortly.

39.       Sir, there are many large scale ticketed events which are organized in the State. For every such event, other than marriages and religious ceremonies, where the crowd capacity exceeds 2000 persons, the organizer shall need to obtain prior permission and the ticket sales shall be monitored through the Commercial Taxes Department. The tickets shall be sold under due authorization and seal of the Commercial Taxes Department. The entertainment tax payable on such events shall be deposited in advance on the estimated ticketed sales and refund if any or payment of dues shall be settled within seven days from the end of the event. For all such events the entertainment tax on the ticket value shall be charged at the rate of 25%.

40.       Sir, I further propose to extend provisions of issuing pre-authenticated tickets as presently done in the case of Casino’s Entry fees, to discotheques, boat cruises, river cruises, night clubs, dance performances, musical performances, theatrical performances including cultural programmes and ballets.

Entry Tax

41.       Speaker Sir, there is an increasing trend of on-line shoppers where the web becomes the market place. Goods are purchased and sold in virtual space and the same can be delivered at the homes or designated address of the purchaser, through various Courier services. Billing is not done locally and hence the State loses sizeable revenue. In order to protect the revenue, I propose to levy entry tax on such Courier services or agents or interstate stage carriages, who deliver these goods locally. It would be their responsibility to obtain registration under the Entry Tax Act and pay the tax as at applicable rates. The Entry Tax Act will be amended suitably.

42.       Sir, I propose to increase entry tax on empty glass bottles used for beer and other like products to 12.5%. It is also proposed to exempt the Small Scale Industrial units, other than those manufacturing liquor, alcohol, ferroalloy, steel melting, steel and chemical units; holding permanent registration certificate issued by the Directorate of Industries, Trade and Commerce of the State Government; from payment of entry tax on the entry of raw materials except petroleum products, into the local area.

43.       Speaker Sir, I feel that there should be a scheme for reward or incentive for the officials of the Department or the public if some input comes from their end which helps the Government to earn revenue on account of concealed revenue. This will encourage the staff as well as public to disclose malpractices by dealers and will assist the Government to realize the tax which is not disclosed by the dealers. A scheme in this regard will be worked out shortly.

44.       Sir, I propose to create an Anti Evasion Bureau with full powers to detect and prevent offences under various Acts pertaining to the revenue of the State. This Bureau will report directly to the Finance Minister.

45.       Sir, it has been brought to my notice that the Department is presently capturing few details by way of Quarterly returns which are not sufficient for better tax administration and they are finding it difficult to complete the effective assessments in absence of such details. I, therefore propose to amend the provisions of the respective Acts as well as rules wherein the Commissioner, under the various Acts; can collect and compile full statistics by way of quarterly returns or special returns, which will help the Department in completing assessments and settling the refund matters expeditiously.

46.       Speaker Sir, we are in the era where Information Technology plays a major role in all fields of life. Its importance in day-to-day affairs is significant and therefore I propose to give maximum emphasis to make use of this technology to provide better and better facilities to the dealers for smooth conduct of their business and at the same time ensure that the Department collects the revenue that is rightfully due to it. With the aim of achieving a paperless office with better tax administration, I propose to fully automate the Department and provide various e-services including e-payments and e- returns.


Sr. no Turnover of Receipts Rate of Tax
-1 -2 -3
(a) Where the charge for the luxury provided in a hotel is not exceeding Rs. 500/- per room per day. NIL
(b) Where the charge for the luxury provided in a hotel is exceeding Rs. 500/- but does not exceed Rs. 2000/- per room per day. 5%
(c) Where the charge for the luxury provided in a hotel is exceeding Rs. 2000/- but does not exceed Rs. 5000/- per room per day. 8%
(d) Where the charge for the luxury provided in a hotel is exceeding Rs. 5000/- per room per day. 12%
(e) Where the hotel is a club or any other entity wherein luxury provided   to    its   members/guests    under   time    share agreement or any other similar system, and wherein thefacility   of  availing   residential   accommodation   by   suchmembers / guests during the given period in a year isallowed     upon     lumpsum     payment     against     his/hermembership. Ten paisa in a rupee, with a deemed room receipt of Rs.2000/- per room per day.
(0 Where any room in a hotel or guest house registered under the Goa, Daman and Diu Registration of Tourist Trade Act, 1982 (Act 10 of 1982) are leased by the hotelier to any company   or   a   person   on   monthly   basis   to   provideaccommodation either as rest house or guest house and thecharges for such room exceeds Rs. 300/- per day. 5%
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