Comment Pieces

Once registered, every establishment is to file a monthly return, between the 15th and 20th of the next month. Now in case you might not want to file a return on time, it is possible for you to get an acknowledgement for having filed a return within the time limit, without actually filing a return! The bribe rate for this is between Rs. 5000/- to Rs. 8000/-. Similarly you can submit a cheque for your tax, but you can also make it disappear for a while and appear later for encashment. But apparently things have improved under the VAT system. At the most, you can delay a cheque encashment through temporary ‘disappearance’ for 2 months. Under the earlier Karnataka Sales Tax Department’s system, you could make it disappear for 6 months at a time. However, one must not have any sympathy for wrongdoers in this system. This is a classic case of collusive corruption, where the private sector and the government official collude to cheat the government. We must remember that even after we have a Lokpal bill, the private guy in this transaction can get away scot free, because the Lokpal only deals with public officials!

Like in the income tax system, everybody must file VAT tax returns. The rules give you six months’ time to submit a revised return. However the scope for corruption has reduced dramatically, because all returns are to be automatically acknowledged on the computer. But it is possible for a Local VAT Officer to accept a late return and give you a manual acknowledgement! How? The answer is delightfully simple – by saying that the printer is out of order! There have been instances of people coming out with revised returns even after a 2 year gap.

The Commercial Taxes department was nonplussed at this revelation. Their answer was that the issue of manual acknowledgements is impossible under the current system and they promised to investigate the matter.

Unfortunately, unlike the Income Tax Department, assessments and refunds are not automatic or directly made to the bank accounts of Assessments. Even though one can pay VAT through e-payments, bribes for receiving refund cheques are fairly commonplace, because one still has to go to the VAT office to receive the cheques from the officials!

The Commercial Taxes department conceded that this is a weak area, but said that they are working on a process to make the refunds directly to the banks of the Assessments. Doing this should not be a significant problem because the number of Assessments is much fewer than Income Tax Assesses.

Watch this space for more information on internal processes.