This is a note on how costly it has become due to VAT at Chennai from today 1-1-2007
Baskin Robbins Ice Cream used to cost Rs 32 for a single scoop and Rs 36 for a premium one. With 2.1% tax earlier, we used to pay about Rs 33/37.
Now they are adding over and above 12.5%, costing us Rs 36/41 at Chennai. When I asked the shop owner at Cathedral Road at 8PM today, he says, thats how the TN Govt. has advised (How Stupid!). He also mentioned that the landing costs for him is at 75%, and marking up is 25%. He never wants to part with that! But actually the tax should have been on the difference from landing cost to selling cost, which would be at (Rs 32 - Rs 24, giving Rs 8 to be VATed at Rs 1/-). Earlier consumer used to pay Rs 0.67 as sales tax with sur. Here today, govt. should be making Rs 0.33 extra from the sale, but due to the negligence, consumer pays 10.4% extra at Rs 3.33. Who wins?
In Bangalore, when VAT was introduced, the cost never went up! The bill used to show the same Rs 33. (incl VAT at 12.5% Rs 4.12). I remember talking to the owner then, and he said, the tax used to be around 5%, now he was taking the cut on profit, to ensure business.
Something is wrong here, with the concept of VAT, being used as an additional tax, than the all inclusive one of MRP. (I have not seen this way in UK and Europe where VAT getting screwed up flawfully).