All states must simultaneously implement VAT, says minister

Our Corporate Bureau

Mumbai, Nov 5: The Maharashtra government on Monday made it clear that though it was resolved to introduce Value Added Tax (VAT) from April 2002, it was of the firm opinion that isolated implementation of VAT by few states would create economic distortions.

The minister of state for finance Rajendra Darda in his speech at an international seminar on VAT organised by the Indian Merchants’ Chamber insisted that all states and Union territories must simultaneously implement VAT. “Maharashtra along with other states has strongly recommended to the Centre that state government must be permitted to levy multi-point taxes on declared goods, services and imports under VAT,” he said.

Mr Darda said that the state government has followed complete transparency in planning the transition towards VAT. The sales tax department, which has already circulated the first draft of the proposed VAT legislation, would release the second draft by end of this month. According to Mr Darda, the state government proposes to publish draft rules and various forms for public debate and seek suggestions. He reiterated that the Centre must allow multi-point taxation on declared goods and amend the Central Sales Tax Act to make this happen. Further, the services should be included in the VAT and the Centre should carry out necessary constitutional amendment at the earliest so that imported goods would be subject to VAT.

Mr Darda said that the VAT would be broad based tax structure and cover sales at multi-point up to the retail level. This would enable the state government to enlarge the tax base. The VAT also prevents the cascading effect by providing system of full set off on inputs that go into manufacturing and by repaying the taxes paid at the earlier stage.