New Delhi, March 26: The Institute of Chartered Accountants of India (ICAI) will come out with a detailed guidance note on value-added tax (VAT) covering all states that will be introducing the new levy from April 1.
The new accounting guideline will be easy to comprehend so that even the smallest businessman will be able to comply with the VAT provisions.
All states except Delhi, Arunachal Pradesh and Himachal Pradesh will introduce VAT regime from April 1.
ICAI president R Bhupathy said it has already advised many states on the VAT legislation they have framed. The legislation in the different states mandates a process of certification from a registered chartered accountant, he said.
According to ICAI officials, the VAT mechanism will require to come to the audit report format. “Through discussions with various states, we are trying to ensure that uniformity is achieved in the process of VAT in different states,” said Bhupathy. He, however, added that there is not uniformity in the agreeable rates of VAT among the different states.
ICAI, the apex professional body for the profession of chartered accountancy, has already started holding seminars on the application of various provisions of VAT and is upbeat about the VAT regime. It has already come up with some publications on VAT.
“As a professional body, we feel that the VAT regime is a good system. All developed countries have this kind of provision which tries to eliminate the cascading effect of tax,” he said.
It eliminates artificial flow of manufacturing and sales in the states resulting from tax sops and instead allows the natural forces of economy to operate, Bhupathy added.
VAT is a multi-point sales tax with set-off for tax paid on purchases at the preceding stage. It was postponed twice since states were not ready with their draft guidelines. Finance minister Jaswant Singh gave an assurance in this year’s budget that VAT would not miss the April 1 deadline.
Bhupathy said there are certain difficulties associated with the implementation of VAT. Several trade bodies have expressed fears of hardships.