Kejri makes it easier for traders, simplifies VAT

In a major relief to about 70 per cent of the traders in the city, Chief Minister Arvind Kejriwal has increased the limit for availing simplified Value Added Tax (VAT) procedure from Rs 50 lakh to Rs 1 crore.

Kejriwal also scrapped the lengthy Audit Report 1 (AR1) which needed to be filed earlier. His decisions came following a meeting with the traders' associations from across Delhi. The AR1 was found to be lengthy and unproductive, he said. But filing it was mandatory for traders with an annual turnover exceeding Rs 10 crore. 

“The previous government had suggested this procedure and made it mandatory. So the government has decided to scrap the AR1 from immediate effect,” he said.

The announcement raising the ceiling of the composition scheme for availing simplified VAT will help  traders with an annual turnover of Rs 1 crore to get the benefit of a simplified procedure for VAT.

“The simplified procedure also allows small traders to pay one percent tax on their turnover. Traders with annual turnover of Rs 1 crore will also get the benefit of a simplified process of calculating their VAT,” Kejriwal added.

The CM also ensured traders that his government will consider raising the ceiling to exempt small traders altogether from VAT.

“Currently traders with a turnover of less than Rs 20 lakh do not need to register with VAT authorities. The government will also prohibit random visits or inspections by VAT inspectors to the markets and trading organisations to avoid unnecessary harassment of the traders,” he said.

Kejriwal said the government will earn more revenue if the VAT process is simplified.“Most of the traders are willing to pay their dues and VAT to avoid any harassment, but the process is so difficult that they have to run pillar to post in the VAT office. The simplified process will help the government to generate revenue and end the inspector raj,” he added.

The Confederation of Traders Association of India (CAIT), which campaigned against the former Congress government for its decision on introducing Foreign Direct Investment (FDI) in the city, also welcomed the announcement.

A CAIT spokesperson said, “The government’s decision will encourage the traders of the city. The process of VAT was so difficult that the inspectors and other officials often demanded bribe from the traders. Now the traders will volunteer to pay their dues for smooth and hassle-free business. The association welcomes AAP government’s trader-friendly move. ”