Our Bureau

New Delhi, July 9

MOST States have recorded robust growth in tax revenues during April-June this year - the first quarter after the State-level value-added tax was introduced.

"This trend has been witnessed in almost all the VAT implemented States, except a few," the Chairman of the Empowered Committee of State Finance Ministers on VAT, Dr Asim Dasgupta, said here today.

Dr Dasgupta said tax revenues of VAT implemented States had grown over 15 per cent in June, which he considered as the first "typical month" of VAT.

According to Mr Ramesh Chandra, Member Secretary of the VAT panel, the tax revenues of VAT implemented States increased 12 per cent in the first quarter.

Andhra Pradesh and Maharashtra are among the few States that recorded lower-than-expected growth rates.

"Taken as a whole, in the first three months, we find that the acceptance of VAT has increased significantly. The implementation has been quite satisfactory. This has been shown in terms of the growth of tax revenues and also the increase in the number of registered dealers under VAT," Dr Dasgupta told newspersons after a meeting of the VAT panel.

The VAT panel, which undertook an in-depth review of the VAT implementation in the first three months, also studied the effect of VAT on prices.

The VAT panel is, however, not convinced about the tax revenue growth of Andhra Pradesh and is understood to have asked the VAT authorities there to take a closer look at their VAT system.

On States that haven't implemented VAT, Dr Dasgupta said tax officers and even a State Finance Minister had informed him that the resistance from the traders in these States is "little less" now.

Dr Dasgupta and his colleagues in the VAT panel would visit the capitals of all non-VAT implemented States by mid-August. As many as 21 States and two Union Territories have so far implemented VAT.

Eight States including five BJP-ruled States are yet to implement it. On violation of the principle of uniform floor rates by certain States, Dr Dasgupta said "appropriate administrative action" would be taken against such States.

He admitted that there was trade diversion on account of such violations.

Dr Dasgupta, however, highlighted that there weren't more than 10 cases where uniform floor rate violations were seen.

At today's meeting, the Delhi Finance Minister, Mr A.K.Walia, urged the VAT panel to ensure that States do not violate these rates.

Dr Dasgupta also said the panel would soon hold a national-level meeting with representatives of those industries which are not passing on the benefit of VAT to consumers in cases where the rates have been lowered.

(This article was published in the Business Line print edition dated July 10, 2005)
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