NEW DELHI: The empowered committee of State Finance Ministers on the Value Added Tax (VAT) begins a two-day meeting on Monday to try and resolve the differences over variation in rates while seeking to persuade States that have not implemented VAT.

The meeting assumes significance since many problems have cropped up as a result of uneven implementation of VAT with some States seeking more tax slabs to be introduced while others have been complaining of high prices of commodities and products.

Some States such as Delhi have already altered the slab system and put 14 products into the exempted list.

The committee headed by the West Bengal Finance Minister, Asim Dasgupta, will take up the issue of the unjustified rise in prices of some products that is being attributed to the introduction of VAT. At the last meeting of the committee on April 15 and 16, he had disclosed that he would be visiting the eight States that have not implemented VAT and urge them to joint the rest of the country. The schedule is expected to be drawn up after this meeting.

He had expressed confidence on being able to resolve the issue of variations in VAT rates during April itself since these could be settled by striking a balance between uniformity and flexibility in the rates.

Besides, he has said that introducing a new tax system is bound to have teething problems and other countries have faced far worse scenarios while doing so.

The two-day meeting may take a firm stance on keeping petroleum products out of VAT, since these prices are not determined by the market but by an administered pricing mechanism.

Trader bodies like the Confederation of All India Traders (CAIT), however, have been insisting that there is a wide variation in VAT rates among States for essential commodities such as atta, maida, tea, cereals and pulses.

The VAT panel had come out with a list of items that was supposed to be totally exempt, but they say cotton and silk fabric, seeds, sugar and tobacco are attracting VAT in many States.

Besides, some States have reduced the tax on diesel from the 20 per cent floor rate laid down by the committee.

Till now, 20 States and Delhi have introduced the new tax regime.

The VAT panel will now try to persuade the eight reluctant states — Uttar Pradesh, Tamil Nadu, Uttaranchal, Rajasthan, Gujarat, Madhya Pradesh, Chhattisgarh and Jharkhand — to implement the new tax regime.

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