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K.R. Srivats

Project outline may be firmed up at VAT commissioners' meet

New Delhi , May 9

Administration of inter-State trade may get more streamlined in the coming days, with a number of States now keen to adopt a dematerialised system for the `C Forms' that are issued to track inter-State trade transactions.

The broad contours of the `C Form' demat project are likely to be firmed up at the next meeting of State VAT commissioners slated for May 15, official sources said.

Finance Ministry officials however maintained that the `demat proposal' was only at a nascent stage.

They also pointed out that `C Form' or some other mechanism was necessary for tracking inter-State transactions even if Central sales tax (CST) were to be abolished.

A number of States are in favour of dematerialising the `C Form' and have even written to the Union Finance Ministry expressing their willingness to adopt such a system.

Any move to demat the `C Forms' is expected to bring benefits such as removal of administrative inefficiencies and better monitoring of inter-State transactions without a time lag.

Currently, trade and industry are required to file declaration forms on inter-State transactions on a quarterly basis.

Indications are that this requirement would be done away with if `C Form' demat system were to be implemented.

Last year, the Finance Ministry was faced with complaints from trade and over the non-availability of `C Forms' at sales tax offices of the country.

The Empowered Committee of State Finance Ministers on VAT had then asked VAT commissioners to ensure ample availability of `C Forms'.

CST compensation

Meanwhile, official sources also indicated that the sub-committee of the VAT panel is expected to finalise its recommendations on the CST compensation package at its meeting on May 15.

Currently, there is no agreement between the Centre and the VAT panel as to how the CST should be phased out and the compensation that States should receive for the loss of revenues from the phase-out.

The Finance Minister, Mr P. Chidambaram, had in his Budget speech of 2006-07 said the VAT panel has requested the Centre to compensate the States for the expected loss of revenue from CST phase-out.

He also said the Centre has proposed that the loss of revenue be compensated through monetary and non-monetary measures which taken together will ensure that the States' revenues remain buoyant.

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