The Hindu : Front Page : VAT from April

Online edition of India's National Newspaper
Saturday, Jun 19, 2004

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VAT from April

By Our Special Correspondent

— Photo: V. Sudershan

VOTE FOR VAT: Union Finance Minister P.Chidambaram with West Bengal Finance Minister Asim Dasgupta at the meeting of the Empowered Committee of Finance Ministers of the States and the Union Territories on the Value Added Tax in New Delhi on Friday.

NEW DELHI, JUNE 18. Almost all the States have agreed to implement the much-delayed nationwide Value Added Tax (VAT) from April 1, 2005. This was decided at a meeting here today between the Union Finance Minister, P. Chidambaram, and State Finance Ministers, at which some States such as Madhya Pradesh and Chhattisgarh expressed some apprehensions, saying "a suitable atmosphere was necessary for the implementation of VAT."

It is expected to boost the States' revenues and help them achieve fiscal consolidation. For consumers, it will avoid the cascading effect of taxation.

"After going through the entire interactions, we can happily say that there is a broad consensus among States to introduce State-level VAT beginning April 2005,'' the West Bengal Finance Minister and Chairman of the Empowered Committee, Asim Dasgupta, told the media.

The decision to switch over to the new tax regime was taken by the States after Mr. Chidambaram made "certain comforting statements" regarding compensation, he said. Mr. Chidambaram is understood to have given the assurance that any possible loss on account of introduction of the VAT or Central Sales Tax would be examined and compensated for.

Earlier, most of the States had agreed to implement VAT from April 1, 2003 and the preparatory work had been undertaken by them.

However, on the eve of its implementation, the then Vajpayee Government backed down, giving in to pressures from some traders' associations and from within the Bharatiya Janata Party which wanted its implementation to be put off till the Assembly elections were over in four States in November last year.

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