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U.P. not to implement VAT this fiscal year

New tax regime in other States being watched

LUCKNOW: The Uttar Pradesh Government on Wednesday made it clear that the Value Added Tax (VAT) would not be implemented in the State in the current fiscal year.

The Administration admitted that the prices of some medicines have increased in the State due to enforcement of VAT in the States where the manufacturing units are situated, but claimed that the situation was being reviewed. The Minister of State for Trade Tax, Sanjay Garg, said the government was reviewing the implementation of VAT in other States and would decide only after its performance at the end of this financial year.

``We have put two conditions before the empowerment committee on VAT -- to abolish Central Sales Tax (CST) and increase the present two slabs of taxes in VAT to three,'' he said, adding that there was no question of VAT till the traders were convinced.

Addressing media persons here, Mr Garg said the government was looking into the reasons behind increase in prices of medicines in the State after the implementation of VAT in the country. ``It is possible that in VAT only four per cent tax was being charged while the State Government had fixed eight per cent tax on medicines,'' he said.

Commenting on the negative approach of VAT regime for the State, he said U.P. being a consuming State pays around Rs 6,650 crores as CST to other States, but receives only Rs 450 crores as its share from the Centre. "The enforcement of VAT will widen the gap," he added.

Defending the imposition of State Development Tax from May 1 on traders whose turnover is more than Rs 50 lakhs, the Minister said the new tax would not burden the consumer as essential commodities have been spared. ``Only 17,000 out of the total 4.5 lakh traders would come under the development tax net who will have to pay only one per cent of their total turnover,'' he said. The Minister said a nominal hike was witnessed in petroleum products after enforcement of development tax but claimed the tax on them in U.P. was lower than others States, except Delhi and Punjab.-- UNI

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