Going ahead on Vat

Updated: Mar 22 2005, 05:30am hrs
The decision of certain states not to implement Value Added Tax (Vat) from April 1 does not create a make-or-break situation as far as countrywide introduction of Vat is concerned. States like Maharashtra, Karnataka, Andhra Pra-desh, Kerala, Orissa, Assam, West Bengal, Punjab and Delhi have reiterated their willingness to implement Vat from April 1 this year.

Frankly, I fail to understand the limitation expressed by some of the states in regard to implementation of Vat. During the last meeting of the empowered committee, on March 7, all the states passed a resolution that Vat should be implemented from April 1. So, as I see it, there is no technical limitation. Importantly, according to the Confederation of Indian Industry, non-implementation of Vat is not in the best interest of the industry.

However, there are global examples where Vat has not been implemented across the country. For instance, in Canada, there are two states which have not adopted the Vat system.

Back home, Haryana has been implementing Vat for the past two years without complications. Maharash-tra implemented Vat from 1995-99. In other words, if two-thirds of the country is willing to embrace Vat, then the results will be fairly satisfactory, though it will be a second-best solution.

Interestingly, Madhya Pradesh, which today is not keen on implementing Vat, was the first state to be Vat- ready. In fact, the then chief minister Digvijay Singh was keen on implementing Vat even though state elections were round the corner! In fact, we had to request him not to implement Vat, since we planned to synchronise it with the other states.

The writer is member-secretary, Empowered Committee of state finance ministers on Vat