The Hindu Business Line : States on course to meet VAT deadline, says Asim Dasgupta

STATES are on course to meet the April 1 deadline set for the introduction of a value added tax (VAT) regime that would replace the existing sales tax system, the Chairman of the Empowered Committee of State Finance Ministers on VAT, Dr Asim Dasgupta, said here on Monday.

The commitment to implement this historic tax reform measure from April 1 this year comes even as Uttar Pradesh continues to express reluctance to adopt the new system. The UP Government is keen that the "ground-level difficulties" are sorted out before the proposed VAT regime is adopted.

"Nearly all states have either finalised their VAT bills by now or are in the process of obtaining Presidential assent, or will reach that stage very soon. There is now only looking forward to the introduction of State-level VAT by all the states and the Union Territories from April 1, 2005," Dr Dasgupta said at a meeting organised for the release of the White Paper on State-level VAT.

Dr Dasgupta was also confident that he along with the Union Finance Minister, Mr Chidambaram, would be able to resolve the ground-level difficulties faced by the Uttar Pradesh Government. Both the Union Finance Minister and the VAT Panel Chairman are likely to meet the Uttar Pradesh Chief Minister, Mr Mulayam Singh Yadav, during the last week of January.

Releasing the White Paper on VAT, the Union Finance Minister, Mr P. Chidambaram, said that this document is the best example of cooperative federalism. He highlighted that "this is the first document in the history of India that is collectively put out by finance ministers of all states of India."

The White Paper, released by Mr Chidambaram, explains the VAT design and deals with, in detail, the concept of VAT and set-off/input-tax credit, coverage of tax credit, treatment of exports, inputs procured from other state, treatment of opening stock, registration, small dealers, composition scheme, classification of commodities and VAT rates.

Interestingly, the White Paper has made a case for bringing imports into the VAT chain. A proposal for VAT on imports, including the collection mechanism with adequate safeguards for the protection of land-locked states is being discussed with the Central Government.

"If decisions on VAT on imports and service tax are taken expeditiously at the national level, then these two important spheres of taxation can be integrated, along with the AED items, into the VAT system of the states from the second year of introduction of VAT," says the White Paper.

On treatment of exports, the White Paper has held that refund would be granted in full for tax paid within the state. This refund would be made within three months. Units located in SEZs and EOUs would be granted either exemption from payment of input tax or refund of the input tax paid within three months.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page