The Hindu Business Line : VAT panel asks States to list out deviations in rates

The VAT panel on Thursday asked the States to come up with an "authoritative list" spelling out the deviations in the VAT rates adopted by them as compared to those decided by the empowered committee.

"There are still some deviations on the VAT rates by States with respect to the decision of the empowered committee. These are limited to two per cent of the number of commodities, which are about 707. We want these deviations to be harmonised," Dr Asim Dasgupta, Chairman of the Empowered Committee of State Finance Ministers, on VAT said.

He said that the VAT implementing States have been asked to submit the list before the next meeting of the VAT panel, which is likely to be held in the second week of June 2006.

Dr Dasgupta said that the State Finance Ministers have also fully agreed to ensure that the existing violations in uniform floor rates (UFR) are corrected through collective discussions.

On the issue of complaints made by trade associations that c-forms are not adequately available, Dr Dasgupta said that States have now been asked to quantify the demand made by traders and the actual number of forms that have been issued. "We do not want the traders to be harassed. We want c-forms to be adequately provided. The States would give us the information before the second week of next month," he said.

Asked whether the VAT panel has any proposal to review the VAT rates in the wake of representation made by certain States for a new rate between four per cent and 12.5 per cent, Dr Dasgupta said that there are no immediate plans to review the rates.

VAT revenue growth

On growth in tax revenues of VAT implementing States, Dr Dasgupta said that the tax revenues of all VAT implementing states taken together grew by about 14 per cent during 2005-06 even while pointing out that in some States the rate of growth of revenue collection exceeded 20 per cent.

"In April and May this year, the rate of growth has significantly gone up. It is way above 14 per cent. It is a good sign and this is what we had anticipated. In the first year of VAT implementation, it was much higher than the historical growth rate of sales tax. In the second year, it is much higher," he said.

Dr Dasgupta also said that Tamil Nadu, Uttar Pradesh and Pondicherry are yet to let the VAT panel know of their decision on VAT implementation. "As far as Tamil Nadu is concerned, the new cabinet has just sworn in and they would require little more time to let us know. So far as UP is concerned, they will let us know at an appropriate time," Dr Dasgupta said.