TN, UP may introduce VAT soon: Shome

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CST, GST merger under review


Our Bureau

Mumbai, May 20

Tamil Nadu, Uttar Pradesh and Pondicherry are expected to introduce value-added tax (VAT) soon, Dr Parthasarathi Shome, Advisor to Union Finance Minister, said here on Saturday.

Addressing a seminar on VAT and Service Tax, Dr Shome said the "newly elected Governments of Tamil Nadu and Pondicherry had declared their intention to fall in line with the rest of the States soon."

He said adoption of VAT by all States would be completed soon. "Even Uttar Pradesh Government has recently said that it is not opposed to VAT, but it would adopt VAT after consultation with the trading community in the State," Dr Shome was quoted saying in a press release issued by the Indian Merchant Chamber, which organised the seminar.

He said only States such as Maharashtra and Karnataka with strong manufacturing base were expected to suffer losses on account of VAT. These States would be compensated by the Centre, he said.

A majority of other States, which are involved in distribution activities, have gained higher revenues after switching over to VAT and hence would not be compensated, Dr Shome, said. The experience gained in the first year with VAT, has encouraged the Government to study the merging of Central Sales Tax with Goods and Services Tax (GST).

"The Empowered Committee of States is co-ordinating the preparations and was making recommendations to the government, in respect of merger of service tax with GST," he added.

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`For CST phase-out, all States should adopt VAT'

(This article was published in the Business Line print edition dated May 21, 2006)
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