The Hindu Business Line : VAT white paper draft to be ready by next week — Roadmap for CST abolition already done: Dasgupta

NECESSARY amendments to the draft VAT Bill provisions of all States have been done with the sole exception of Uttar Pradesh (now in the process of carrying out this exercise), and the final draft of the White Paper will be ready by next week for discussions with trade and other related bodies.

Some 19 points of commonality between the States have already been identified.

VAT rules are being perceived as the most critical, as these will have to incorporate the most radical amendments. Self-assessment and input credit set off are the crucial elements of the State-level VAT, which would replace the existing sales tax system in all 29 States of the Union from April 1.

Making these observations before a large gathering of trade and industry representatives at an interactive session on `VAT implications', organised by the Bharat Chamber of Commerce here today, Dr Asim Dasgupta, Finance Minister and Chairman of the Empowered Committee of State Finance Ministers, constituted for implementation of VAT said the road map for CST abolition has already been prepared.

He gave an assurance that no additional tax burden will fall on the consumer on account of the proposed new VAT structure.

Explaining the rationale and structure of the new VAT as designed by the empowered panel, he said total convergence of the views of all 29 States with regard to VAT rules was being attempted, and "when it starts operating, traders will gain on lower taxes and reduced harassment, and the revenue growth will help the Government too."

He said Bengal would show the way in framing the rules. Describing the self-assessment return form as highly simplified, he said only one set of people are not going to like it: the tax lawyers.

Describing the proposed model VAT Act as one which would strike a balance between commonality of rates and federal flexibility, he said the set-off features have to be uniform for all States. He said the VAT panel has already completed one round of talks with the newly-formulated national representative body of trade and commerce.

Such a body was also being formed at the State-level for close interaction with trade organisations who are crucial for smooth implementation.

Pointing out that capital goods related trade credit set-off will be available to both manufacturers and the trade, he said credits of over Rs 1 crore will be made available in a phased manner.

He said all problems with regard to high set-offs would be smoothly tackled once the coordinated tax information system is put in place. The online system will provide the updated picture of collections by each State.

Dr Dasgupta said the Centre will be approached for contributions to the extent of 50 per cent of the cost of the system, with the States' VAT committee taking care of the balance. The proposed information exchange, to be ready within one year from April 1, 2005, will facilitate set-off in line with the collateral CST reduction, which will start after the first year of VAT implementation.

He also clarified that the existing incentives under the present ST system will continue without disturbing the VAT chain.

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