States may miss VAT deadline again

New Delhi, Oct 15 | Updated: Oct 16 2004, 05:30am hrs
The government may miss the April 1, 2005 deadline for implementation of a country-wide value-added tax (VAT) regime with the finance ministry yet to appoint consultants in nine special categories and three newly-created states.

Further, exclusion of a dozen states, too, would pose problems, said Praveen Khandelwal, secretary general, Confederation of All India Traders. Though the government has received expressions of interest from 18 companies for helping states to put in place VAT, the process of finalisation of the consultant is likely to take some time.

The consultant will be expected to perform functions like designing, tranining and implementating VAT. The project has been taken up with technical assistance from the World Bank and bidders will have to undergo the multi-stage tendering process before seeking consultancy contract from the government. The assignment itself will be for a period of 18 months.

More importantly, Mr Khandelwal pointed out that Uttar Pradesh has not agreed to implementation of VAT. Many states have not yet passed VAT legislation and it may not be possible to get the legislation approved by the respective state Assemblies and seek the approval of the President within a short time, he added.

Asim Dasgupta, chairman of the empowered committee of state finance ministers is expected to meet UP chief minister Mulayan Singh Yadav again shortly to impress upon him the need for implementing the VAT regime.

The traders are also sore that Dr Dasgupta has not started the process of consultation with the traders as promised by him in July. He had promised to set up a joint committee with representatives of the trading committee for implementation of the VAT.

Finance minister P Chidambaram in his Budget speech had urged the states to pass VAT legislations by the end of 2004. He had also promised to compensate the states for any loss of revenue after implementation the VAT regime. The states, however, have not been responding with the same enthusiasm.