President Writes

Dear Colleague

The first two months of the New Year were quite eventful and hectic. We had several educational programmes, entertainment programmes, and one of the most busy marriage season. Our members, while participating in all these had to address themselves to the most time-consuming task of scrutiny assessments of two Assessment years, viz. 2002-03 and 2003-04. With the weather on our side, we could meet all our commitments with aplomb.The Association conducted study circle meeting, Brain Trust meetings and the Non-Residential Refreshers Course. The members responded to all these programmes with much enthusiasm. To bring out the latent non-professional talents of our members, we organized two cricket matches : CAA v/s I.T.Bar and CAA v/s Baroda Branch of WIRC of ICAI. The match between CAA and the I.T.Bar ended in a tie-breaker. By winning the other match , CAA successfully retained the revolving trophy for the consecutive third year. The Association also successfully organised the staging of a drama in Ahmedabad.The subject of Service Tax has recently generated much controversy with the Service Tax department conducting a series of surveys aimed at bringing the various service providers under the net of the Service Tax. As professionals we are duty bound to obey the law and to educate our clients to cooperate with the law enforcing agencies. After all, every citizen is expected to abide by the laws for the common good of the society.There has been much misgivings about the proposed Value Added Tax (VAT), particularly among the traders. According to the government's white paper on VAT, a trader with a turnover of Rs 5 lakh and above need to register under the VAT. The states, however, have been empowered to fix a lower limit. But, if the turnover is between Rs. 5 lakh and Rs. 50 lakh, the traders have the option of registering under the composition scheme.

Under the composition scheme, a trader will have to pay a small percentage of his gross turnover as tax. However, those opting for composition scheme will not be entitled for input tax credit. Retailers may opt for composition scheme as it involves less hassles. But, as their capacities go up, they would rather opt out of the scheme. However, the freedom to choose VAT or composition scheme remains with the traders. The difference between the two would be marginal, depending on the nature of business.Some states have stipulated that a composition dealer cannot charge VAT on their sales. This might make mid-chain dealers incompetitive and reduce their position to that of an unregistered dealer. States should either restrict the scheme for retailers only or allow composition dealers to charge VAT on sales that a dealer can claim back, as practiced internationally. For smaller registered dealers, the composition scheme will be useful.
With warm regards,

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