State FMs To Meet On April 8

New Delhi, March 26: | Updated: Mar 27 2003, 05:30am hrs
The empowered committee of state finance ministers has been asked to sort out some of the contentious issues on the value-added tax including the refunds on credit and exemption for exports by the ministry of finance (MoF). Addressing a PHD Chamber of Commerce and Industry (Phdcci) seminar on VAT, Anupam Dasgupta, additional secretary, MoF said, "The empowered committee is meeting on April 8. Refund of VAT credit is one of the most important issues that will be taken up in the meeting".

While it was proposed that the refund would be provided after nine months, the industry had objected to the notion on the ground that it would block working capital funds and sought monthly refund system.

Mr Dasgupta also clarified that exports would not come under the VAT system. "We have requested all the states to zero-rate (completely exempt) exports. How it will operate or whether there will be any unanticipated delay or not, has to be looked into," he added.

Mr Dasgupta also assured industry that turnover tax, luxury tax and surcharge on sales tax would be abolished once VAT was put in place.

Entry tax will be allowed only if the concerned state has imposed it instead of octroi duty.

Mr Dasgupta said all states needed to adopt the harmonised system of nomenclature for fixing VAT rates on different items. "Except for a few, all the states have come up with VAT Bills. It will now come up for Presidential assent. We will see to it that they get the approval fast," Mr Dasgupta added. Outlining the role of the Centre as a facilitator and coordinator, he said the government was working on a mechanism for compensating states for any revenue loss during VAT implementation. Mr Dasgupta said the reform measure would not end with the introduction of VAT and government would review and relook any discrepancy that may arise after April 1.

Meanwhile in another interactive meting on VAT organised by the Institute of Chartered Accountants of India (ICAI), R Bhupathy, president, ICAI said, "After the VAT legislation comes in place in different states, we will come out with guidelines, including on a complete audit report, so that the department will administer the law in proper manner".

He said the institute had prepared a draft note in this regard for ensuring uniformity and it had been circulated among the states. VAT would improve competitiveness in the industry and manufacturers who were able to produce in cost-effective way would not have any objections to it, Mr Bhupathy added.