Whens VAT Query Haunts Taxmen In Eight States

Thiruvananthapuram, May 2: | Updated: May 3 2003, 05:30am hrs
The fluidity in VAT-date will distort the revenue estimates of the 2003-2004 Budgets of VAT-compliant States, Kerala finance minister K Sankaranarayanan has pointed out. At least, eight states - Haryana, Madhya Pradesh, West Bengal, Maharastra, Gujarat, Andhra Pradesh, Tamil Nadu and Kerala - are likely to be thrown into this procedural predicament.

To sort this out, the state FMs will need an assurance of categoric when from finance minister Mr Jaswant Singh, Mr Sankaranarayanan told FE. This will be the key question in the meeting of state FMs with Mr Singh, after the session of the Empowered Committee of Finance Ministers on VAT this week.

The sales tax revenue estimates in the states which have passed the legislation could go haywire. For instance in the Kerala case, the sales tax differential in computing it the VAT way and the existing Kerala Government Sales Tax (KGST) way will be about Rs 500 crore. This is a whopping one-tenth of the states sales tax collections. According to state finance ministry officials, if the Centre decides on a mid-financial year date, that will make accounting too cumbersome. The general opinion on this from the official level is that if the VAT method is not assumed from April 1, 2003, it would be best to wait till April 1, 2004.

It is when the empowered committee is set to meet on May 5 and 6 to wrap up the new schedules to make the country ready for VAT from July 1 that Mr Jaswant Singh has announced in parliament that VAT implementation will not be effected from July if it is piecemeal. Whatever the political imperitives, it is taxmen in the VAT-compliant states who have been tearing their hair down at the FMs VAT weathercock.