VAT Rate Cut On Medicines, Footwear To 4 Per Cent

New Delhi, April 23: | Updated: Apr 24 2003, 05:30am hrs
The chipping away of the proposed value-added tax (VAT) regime begins. The empowered committee of state finance ministers which met here on Wednesday decided to reduce the VAT rate of 12.5 per cent to 4 per cent for medicines and footwear.

Briefing newspersons, West Bengal finance minister and chairman, empowered committee of state finance ministers, Ashim Dasgupta said another round of meeting to decide on exemptions for socially sensitive items would be held on April 29-30. Life saving drugs are proposed to be exempt from the VAT regime altogether. The final decision on the matter will be taken on April 30.

Other items that figured prominently in the VAT meeting are related to the tax rate for naphtha and treatment of maximum retail prices.

The empowered committee met earlier on April 8, and a commitment was given by 16 states to implement VAT. These states, accounting for over 75 per cent of the countrys trade and industrial production, had decided to implement VAT from June. Administrative details about VAT and the stringent provisions not acceptable to traders are also being deliberated by the committee.

The introduction of VAT, which was deferred due to lack of preparedness, political pressures and protests from traders, has also prompted the ruling Bharatiya Janata Party to constitute a 5-member committee to present its views to finance minister Jaswant Singh.

With VAT introduction missing the April 1 deadline, the empowered committee is now under pressure to implement it on the new deadline of June 1.