75-80pc consumers think VAT never goes to govt

A study has found high-level mistrust among the people regarding VAT, as about 75-80 per cent of consumers think that their VAT payment never goes to the government account.
The study, conducted by the National Board of Revenue (NBR), also revealed that 70 per cent of the businesses consider VAT as their money. They think that the government is taking away VAT from their profit, it added.
The study has been conducted by the Vat Online Project (VOP) under NBR as part of its groundwork for framing a communication strategy for the VAT payers for 2016-19 period.
The communication strategy has been framed with an aim to motivate the stakeholders and partners concerned on the new VAT and Supplementary Duty Act 2012, to be implemented from July 2017. The new law will replace the existing VAT law, framed in 1991.
VOP published the 'VAT payer communication strategy' recently. The strategy, funded by the World Bank, has been developed to build trust of taxpayers on tax administration, make existing taxpayers compliant, and expand tax net.
The study has found about 40-50 per cent people, who are taxpayers but not involved in any business, are not aware of VAT or VAT process.
"It is found that about 35-40 per cent people know the term VAT. But they found VAT is a complicated process. About 5-10 per cent people know about VAT or customs duty, but do not possess a clear idea," the study report said.
Some 40-45 per cent of the businesses are not aware of VAT rebate or rebate claiming process.
"It is also found that about 40-50 per cent of people, who are involved in business and are termed as VAT trustees, are depending on persons who can understand the VAT Law and can show them how to avoid paying tax money to the government."
It is also found that about 50-60 per cent people think the process of VAT collection every month is a matter of great hassle.
In line with these findings, VOP has framed the strategy to launch a campaign to establish a brand strategy.
Officials said VOP's objective is to create a brand image of the new VAT Law, as it feels the stakeholders need some motivation in the transition process.
In the communication strategy, NBR has defined the consumers as 'VAT payers' and businesses as 'VAT trustees.'
It will also term the consumers as 'VAT smart', who are aware of their rights, and apply the rights such as collecting VAT chalan and examine VAT reliability of sellers.