It is imperative that VAT is implemented in India at the earliest so that the Indian industry will have the cutting edge to compete in the world market, CII said in a statement suggesting six-point implementation strategy.
The VAT has to be implemented by all states at the same time, CII suggests citing the decision of the the empowered committee on VAT.
The draft VAT laws of all states should be uniform and there should be no disparities amongst them, it added.
Its other suggestions are: the deadline for passing the legislation, for publishing rules and regulations and for other modules like computerisation, audit methodology should be same across all states.
The target date for convergence of state levies, abolition of central sales tax (CST), removal of restrictions on input tax and convergence of state VAT with service tax to be made part of legislation.
There should be changes in ancillary legislations (like income tax, company law etc) to ensure VAT compatibility.
It also stressed upon the need for a monitoring mechanism in order to prevent unilateral changes in VAT law after its introduction. The VAT process should be monitored by the Central government on a continuous basis, it said.
Advantages of VAT, according to CII include, better tax compliance, fiscal consolidation of the country and better integration in the World Trade Organisation (WTO) regime. VAT is one of the most radical reforms that have been proposed for the Indian economy after years of political and economic debate, it said.
Reflecting on the current state of proposed VAT regime, CII said: Twenty-two Indian states have drafted the VAT norms for their respective states and some like Andhra Pradesh, Karnataka, Tamil Nadu, Haryana and Uttar Pradesh have also modified them. Despite this, the country is not close to the implementation of VAT. Haryana is the only state to implement VAT from April 1, 2003.