The Hindu Business Line : State Finance Ministers' meet today on VAT

This meeting of the Empowered Committee of State Finance Ministers on Value Tax (VAT) assumes significance given that some States are yet to enact laws for the proposed regime.

Some States have expressed reservations over VAT implementation from April 1.

The trading community too has been complaining about the introduction of State-level VAT from that date. Traders have been claiming that many State administrations were not yet prepared for it. The meeting on Monday would be the first meeting of the empowered committee after the presentation of the Union Budget for 2005-06 in Parliament on February 28.The State Finance Ministers may also review the extent to which their recommendations for changes to the Central Sales Tax (CST) Act have been accepted by the Central Government.

The States had made several recommendations to make the CST Act consistent with the proposed State-level VAT design.

The Empowered Committee of the State Finance Ministers had urged the Finance Minister, Mr P. Chidambaram, to do away with the exemption on CST enjoyed by Government departments on inter-State purchases. It was held that this could bring down the scope for fraud in such purchases.

The States had also made recommendations on the assessment and simplification of reforms under the CST Act.

The Finance Bill 2005 seeks to amend the CST Act to include VAT legislations of the States within the ambit of the definition of the sales tax law and the general sales tax law.

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