Goa channel upset about 12.5% VAT on MFPs

PANAJI, INDIA: With a 12.5 percent Value Added Tax (VAT) imposed on multi-function devices (MFD) and all-in-one printers (AIO), the channel in Goa is a miffed lot.

Their grouse is that while other IT products carry a four percent VAT, these machines have been excluded from the government's list of IT products and therefore attract a 12.5 percent VAT. What is adding to their woes is the lack of any association lobbying to clarify this with the state government and bring down the VAT levied on MFDs and AIOs.

The Goan Government had levied 12.5 percent VAT on MFD since December 2007 and had rearranged the IT product list, excluding MFP in the bargain. Not surprisingly, partners are complaining that the sale of MFD has considerably reduced in the state.

Prashant Kuncolienkar of Computronics Infotech said, “Other state governments in India added MFDs to the IT product domain so the tax payable in those states is only four percent. We don’t know why our government took this decision. It has resulted in low revenue not just for IT dealers but also for the government, because if the sales drop then the revenue to the government also dips.”

Nivelle Chico of Syscon added, “The government is doing injustice to MFD dealers in Goa. We request the authorities to rectify this decision.”

Dealers in Goa are now trying to clarify this confusion about the product category to government officials and hope to have it resolved soon. Dhiren Mehta of Magnamious Systems said, “We have sent a letter to the concerned department asking for a clarification about the tax levied. We expect a positive response from them. Since the matter is in initial stages, we thought of resolving the problem through negotiations rather than in a hard-handed fashion.”

Some partners said that due to the price disparity of MFDs in Goa as against other sates, corporate customers prefer billing the product in neighboring states and getting it shipped to Goa, which means that orders are beginning to dry up in the local channel community.

But some dealers in the state feel that this VAT disparity is not a major issue. Ruben Quadros of Texel Computers said, “As of now this is not a major problem because whatever tax is levied, we will collect it from customers.” He also noted that if customers opt to buy MFDs from neighboring states, then they will have to pay customs sales tax (CST), which will ultimately bring the price to the same level as those prevailing in Goa.

Against this backdrop, partners are also upset that the Goa IT Business Association (GIBA) which has been lying defunct for a while, has not tried to take this issue to the government and resolve it. Most of the partners spoken to are especially upset that Balkrishna Prabhudesai, the current President of GIBA, is not accessible.

The DQ Week too tried to get in touch with Prabhudesai, without success. It is learnt that currently, dealers in Goa have decided to suspend the purchase of MFDs and are inviting distributors like Ingram Micro India and Redington India to lobby with the government and bring down the VAT levied on MFDs.