Dasgupta Apprises FM Of States Preparedness On VAT

Updated: Aug 19 2004, 07:21am hrs
Finance minister P Chidambaram on Wednesday met chairman of the empowered committee on value-added tax (VAT) Asim Dasgupta to evaluate the progress made by states on implementing the new tax regime from April 2005.

The meeting assumes importance in the light of the Centres promise to compensate states for revenue loss, if any, when VAT comes into force, partially replacing the 4 per cent central sales tax.

Dasgupta apprised Chidambaram of the preparedness of states for VAT, official sources told PTI.

States have finalised VAT rates for about 500 items with 250 essential commodities including agro-products, medicines and manufacturing inputs slated to attract a 4 per cent tax while 217 other items would attract a 12.5 per cent tax.

About 41 items like petrol, diesel, ATF, agri-equipment and newspapers will be exempted from VAT while precious metals like gold and silver will attract only one per cent tax. Sugar, textile and tobacco items would be out of the VAT net. The empowered committee on VAT will soon come up with a formal list of the items and the tax rates.

The VAT panel, which met here on Tuesday to iron-out differences, also took up with Chidambaram the issue of a compensation package for any revenue loss when they switch over to the new tax regime. The panel is in the process of harmonising and fine-tuning VAT legislations, which have to be passed by the respective state assemblies.