12th Finance Panel Talks VAT At First Sitting

New Delhi, February 18: | Updated: Feb 19 2003, 05:30am hrs
The 12th Finance Commission discussed the implications of introduction of value added tax (VAT) at its first meeting with economists and economic administrators.

The meeting, which was held in the Capital on Tuesday and chaired by chairman C Rangarajan, also discussed the issues relating to sharing of resources between the Centre and the states, implications of the gap filling approach for giving grants-in-aid, relatives of merits of alternative methodologies of projection and criteria for determining transfer of resources to local bodies.

According to the officials present at the meeting, the discussion of VAT assumes significance in view of the governments decision to introduce VAT from April 1. The Centre, they pointed out, has already proposed to compensate the states for the losses as a result of implementing the uniform tax regime to the extent of 100 per cent in the first year and 75 per cent and 50 per cent in the next two years.

The meeting also discussed the pros and cons of the medium-term fiscal reform programme and issues concerning conditional and unconditional grants.

Among others, the meeting was attended by eminent economists who include Dr Shankar Acharya, Dr JL Bajaj, Prof BB Bhattacharya, Prof S Gangopadhya, Dr Sudipto Mundle, Dr Mahesh Purohit, Prof Indira Raja Raman and Dr Charan Wadhawa.