The Hindu Business Line : VAT revenues up 32 pc in H1

The value added tax (VAT) revenues of States continue to be buoyant, with collections in the first half of the current fiscal up by 32 per cent to Rs 34,019.46 crore from Rs 25,786.07 crore in the corresponding period last year.

Tax revenues (includes items that are not under VAT) of these States surged by about 27.3 per cent to touch Rs 54,616.57 crore compared with the collection level of Rs 42,913.60 crore in April-September 2005. This is nearly double the rate of growth achieved last year.

Asked to comment on the main reasons for the buoyancy in VAT revenues, the Chairman of the Empowered Committee of State Finance Ministers on VAT, Dr Asim Dasgupta, told newspersons that the major cause was "the potency of VAT itself". He also highlighted that the States have become conscious of closing the tax collection leakages and loopholes.

All the States and Union Territories other than Tamil Nadu, Uttar Pradesh and Pondicherry have implemented State-level VAT. While Tamil Nadu has expressed intent to implement VAT from January next year, Pondicherry is expected to soon decide on the issue.

Dr Dasgupta said that Uttar Pradesh might take few more months to switch over to the VAT system. Indications are that the State would take a decision on implementing VAT only after its assembly elections early next year. As regards CST compensation, Dr Dasgupta said that the Empowered Committee has been able to reach certain alternatives on which there is a fairly common view. "We need another meeting to finalise that and we hope to achieve that in another month's time. We are on an interactive mode with the Union Finance Ministry to reach convergence on the CST compensation package issue," he said.

He also said that the VAT panel would again meet here on December 12. One of the alternatives under the consideration of the VAT panel is bringing service tax under the concurrent list of the Constitution.

Dr Dasgupta said that the VAT panel has also decided to arrive at commonality in VAT rules and procedures across the States and that they would be finalised in a month's time. "We will also be interacting with the national level trade bodies for this purpose," he said.