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Tuesday, Aug 17, 2004

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VAT empowered panel inducts 15 more State Ministers

K. R. Srivats

New Delhi , Aug. 16

THE Empowered Committee of State Finance Ministers on Value-Added Tax (VAT) has been broad-based. The Finance Ministers of as many as 15 States and the Union Territory of Pondicherry have now been formally co-opted to the Empowered Committee, raising its strength to 30 members.

Informed sources said that the move to induct more members comes at the behest of the Empowered Committee itself. A number of State Governments have been insisting that they be included in the committee to express their views about the implementation of the VAT regime that would replace sales tax.

Within a month of the United Progressive Alliance Government assuming office at the Centre, the Empowered Committee had conveyed to the Union Finance Minister, Mr P. Chidambaram, that the State Governments were willing and committed to move to a VAT regime from April 1, 2005.

The Finance Ministers or Taxation Ministers of Andhra Pradesh, Arunachal Pradesh, Bihar, Chhattisgarh, Goa, Himachal Pradesh, Haryana, Manipur, Mizoram, Nagaland, Orissa, Pondicherry, Sikkim, Tripura and Uttaranchal are among those who have been formally inducted as members of the Empowered Committee.

Meanwhile, the Finance Ministry has decided to appoint Dr Govinda Rao, Director, National Institute of Public Finance and Policy, as the Chairman of the recently constituted, seven-member Technical Expert Committee for ensuring smooth implementation of VAT from April 1, 2005.

The terms of reference of the committee include steps to ensure that VAT is revenue enhancing; principles and levels of compensation to be paid to States for revenue loss, if any, due to implementation of VAT and working out modalities for phasing out central sales tax.

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