BANGALORE: Finance and Industries Minister P.G.R. Sindhia on Wednesday admitted "confusion and shortcomings" in the implementation of the value-added tax system as pointed out by trade bodies.

However, he asserted that the means and methods followed to introduce the rationalised tax collection system are correct though they have not yielded the desired results.

Mr. Sindhia was addressing a meeting of the recently reconstituted VAT Consultative Committee here, to which presspersons were allowed just before its conclusion.

The Government, he said, will look into suggestions, including measures to make consumers aware that they should insist on bills for each purchase and step up tax intelligence and vigilance as suggested by trade bodies. He will convene a meeting of the committee in the second week of December and make efforts to include some of the suggestions in the budget proposals, Mr. Sindhia said.

Later addressing a press conference, he announced that the Centre has released Rs. 251.16 crores as compensation for a loss of Rs. 270.11 crores incurred by the State from April 2005 to August because of the introduction of VAT. The State has registered tax collections of Rs. 493 crores, Rs. 452 crores, Rs. 451 crores, Rs. 417 crores, Rs. 428 crores and Rs. 422 crores in the six months from April to October 2005.

As recommended by the 12th Finance Commission, the Centre has consented to rescheduling loans of Rs. 7,166.72 crores granted to the State with a 20-year repayment period and an interest rate of 7.5 per cent, Mr. Sindhia said.

The Finance Commission has recommended that the loans from the Centre to States contracted till March 31, 2004, and the outstanding on March 31, 2005 may be consolidated and rescheduled for a fresh term of 20 years that can be repaid in 20 equal instalments, he added.

The Centre has extended the privilege to the State following the fiscal stability it has achieved by eliminating revenue deficits and containing fiscal deficit.

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