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VAT from April

By Our Special Correspondent

JAIPUR, NOV. 4. The Rajasthan Government intends to implement the value added tax (VAT) from April 1, 2005, and has sent the draft VAT Act for the Presidential assent on October 27. If any changes in the proposed legislation are needed even after the President's approval, they will be introduced by promulgating an ordinance or tabling a Bill in the State Assembly.

Stating this at a meeting of the State Finance Ministers in New Delhi early this week, the Rajasthan Minister of State for Finance, Virendra Meena, pointed out that the Central Empowered Committee had accepted the State's request to compensate for the loss of revenue earned by sales tax. The committee is headed by the West Bengal Finance Minister, Asim Dasgupta.

The compensation will cover the total revenue losses in the first year of the implementation of VAT, and will be to the tune of 75 per cent of the losses in the second year and 50 per cent in the third year. Similarly, the Centre has also conceded to the demand to treat the average annual growth rate in three years as the basis of compensation formula.

Mr. Meena said the State Government would incur the expenditure on publicising VAT from the special grant of Rs. 5.50 crores given by the Eleventh Finance Commission. The Centre will bear the expenses on popularising the new system at the national level.

The meeting, held in the Parliament House Annexe on Tuesday, was presided over by the Union Finance Minister, P. Chidambaram.

Mr. Meena said a separate meeting would be organised later this month to discuss the issues relating to service tax. Rajasthan is slated to get 29 per cent share in the shape of service tax.

The State Government has nearly completed the task of computerising the offices of Commissioner and Deputy Commissioners of Commercial Tax and Commercial Tax Officers for facilitating smooth VAT operations.

The Minister reiterated the demand for abolishing the Central sales tax in the meeting, while pointing out that the State Government had set the target of collecting Rs. 5,250 crores this year as sales tax, including the Central sales tax.

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VAT from April

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