Sukhbir Singh Badal, Deputy Chief Minister of Punjab today said that in order to permanently resolve the problem of VAT refunds being faced by Punjab industrialists, Government of Punjab has decided to set up a dedicated Corpus to be maintained by the Excise and Taxation Department. This Corpus will be called “The Punjab VAT Refund Fund”. All the collections made by the Excise and Taxation Department as Advance Tax will go to this Corpus. The funds in this Corpus would be used to clear the VAT refunds first. At the end of the month, if any funds are left in this Corpus, they will be transferred to the Consolidated Fund of the State. Badal further elaborated that on an average the State expects to collect advance tax of Rs.200 crores per month. On the other hand, every month, refunds amounting to Rs.100 crores are likely to accrue. So, there will be no dearth of funds, once the refund is cleared by the AETC.
He further added that as of now, there is a backlog of about Rs.300 crores of refunds. The refunds will be cleared out of this corpus on First In First Out basis. He said that with the creation of this dedicated Corpus, the entire backlog is likely to be cleared within next three months. The Deputy Chief Minister has also said that industrials had brought to his notice that once the refunds are cleared by the Excise and Taxation Department, they face harassment at the level of Treasuries. He said that in order to resolve this problem, he had directed that henceforth, once the Excise Department clears a refund file AETC will clear the refunds from this corpus fund which is outside treasury. While doing so, the AETC will also fill in the bank account number of the industrialist. As a result, the refund amount cleared by the AETC will directly be credited into the bank account of the industrialist and the industrialist will not have to even go to the Treasury. Badal further added that in the next Assembly Session, the necessary amendments in the VAT Act will be made and the entire system will be in place by 15th November, 2013. He added that in view of the representations from the industrialists a sum of Rs. 75 crores was released last week to clear the pending refunds.