Industry & Economy
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Taxation
VAT compensation: Centre makes supplementary demand
K.R. Srivats
New Delhi
,
Aug. 11
With the VAT compensation claims relating to 2005-06 being made in the current fiscal by several States, the Centre has made a supplementary demand for grant of Rs 1,000 crore for compensating them on the revenue loss due to VAT.
This forms part of the proposals, involving cash outgo for the central exchequer, under the first batch of supplementary demands for grants for 2006-07 placed in the Lok Sabha recently.
A Finance Ministry official said that States have in all made claims worth Rs 6,500 crore for 2005-06, of which about Rs 2,471 crore was paid during 2005-06 itself.
"The remaining Rs 4,000 crore is being settled from this year's budget allocation. As this year's allocation is only Rs 3,000 crore, we are making a supplementary demand of Rs 1,000 crore," the official said.
Budget 2005-06 had provided for Rs 5,000 crore for VAT compensation, which was later pruned to Rs 2,500 crore as there were not many claims beyond this amount in 2005-06 itself.
The Centre has so far in the current fiscal paid about Rs 1,695 crore towards claims made by States for revenue losses arising on account of VAT implementation.
The claims settled in the current fiscal relate to 2005-06. Official sources pointed out that the Government would have to go in for another round of supplementary demand for grants later this year to compensate the States for revenue losses relating to 2006-07.
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