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K.R. Srivats

New Delhi , Oct 14

THE Finance Ministry has received another claim for compensation from Bihar for shortfall in tax revenues on account of VAT implementation.

Official sources said this was Bihar's second claim for compensation and involved Rs 12 crore. This claim was for revenue shortfall in July and August 2005.

Last month, the Finance Ministry had settled and paid a compensation of Rs 47.31 crore to Bihar towards the shortfall in tax revenues for the April-June period.

Bihar collected about Rs 1,816 crore as sales tax in 2004-05 against Rs 1,560 crore in 2003-04.

As regards the latest claim of Rs 12 crore, sources said that more details have been sought from Bihar and that the claim would be processed as soon as the details are made available by the State.

Asked whether Maharashtra's compensation claim of Rs 259 crore for the first quarter has been processed and settled, the official sources replied in the negative.

Under the VAT design that has been implemented, States can make a monthly claim to the Centre for compensation of the revenue loss, if any, arising from implementation.

The Centre would go by the certification of the Accountant-General of the State concerned for processing the compensation claims.

Tax revenues of 21 VAT-implementing States and Union Territories had cumulatively increased by around 16 per cent in the first five months of the current fiscal.

Authorities overseeing VAT implementation are confident that the compensation to States for the current fiscal would not exceed Rs 5,000 crore, which is the amount provided by the Centre in the current year's Budget.

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