The Hindu Business Line : Budget to reflect final VAT norms

`The State has made it amply clear to the Centre that its meagre revenue sources would not be allowed to be compromised in the new scheme of things.'

THIRUVANANTHAPURAM, Jan. 3

THE Finance Minister, Mr K. Sankaranarayanan, has said that the Centre has agreed to Kerala's request for finalising the value-added tax regime norms in time for the latter to structure the next State Budget appropriately.

The Minister said this while inaugurating a seminar on `Kerala Value Added Sales Tax Bill 2002' organised by the State Commercial Taxes Department in association with the Centre for Taxation Studies (CTS).

The Centre has also offered, though subject to conditions, to make good the revenue loss consequent upon the State embracing the VAT regime from April this year along with the other States.

The extent of compensation will progressively reduce from a high of 100 per cent in the first year to 75 per cent in the second and 50 per cent in the third before trickling down to zero over a period of 2-3 years.

By that time, the State would expectedly reach a stage where it is able to sustain itself in the new dispensation.

In any case, the Minister said, the State has made it amply clear to the Centre that its meagre revenue sources would not be allowed to be compromised in the new scheme of things.

The State Government is currently assessing the revenue implications of embracing the VAT regime.

It is collating suggestions and opinions from all sections of people involved - all assessees including merchants, traders and manufacturers, and tax practitioners.

Two more seminars will be conducted in Ernakulam and Kozhikode to get inputs from people concerned, the Minister added. The Centre would have to get its act together and come out with taxation norms relating to a number of vital sectors including agriculture.

Likewise, VAT implications for the services sector also have not been brought out in a lucid and clear manner.

Being a predominantly consumer State, Kerala has much at stake as the deadline for the changeover to the new taxation regime nears, the Minister said.

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