VAT Panel to take stock of teething woes

After the meeting of tax commissioners, state finance ministers will meet this month to review the situation, Chandra said. However, dates of these meetings have not been fixed yet, he said.

Chandra said talks between the empowered committee and BJP leadership to implement VAT in five party-ruled states are on. Similar talks are also underway with the Uttar Pradesh government and Tamil Nadu governments, he added.

“I cannot disclose to you what we have discussed. But we have allayed their apprehensions over VAT,” Chandra said. So far 18 states have implemented VAT, while Assam and Meghalaya will introduce it on Friday, he added.

Uttar Pradesh, Tamil Nadu, Uttaranchal, besides five BJP-ruled states — Rajasthan, Madhya Pradesh, Gujarat, Jharkhand and Chhattisgarh — have not introduced the new tax system.

To assure the BJP on phase out of CST, Chandra said “CST is a barrier and empowered committee is working to remove it. We have determined that the rate of CST will come down to two per cent from April 1, 2006, before being ultimately phased out from April 2007.”

With the phasing out of CST, the government will work towards a system of integrated goods and service tax, Chandra said while adding that “This will be the next big thing after VAT in terms of tax reforms.”

Various anomalies in the VAT tax structure between states have arisen after implementation of VAT. Chandra, however, denied allegations from certain quarters that some states have not come out with a list of items under VAT. “There is annexure after state VAT Acts, containing the list of items,” he said.

When asked whether VAT will be imposed on around 550 items as is stated in white paper on VAT, Chandra said it will be levied on as many items as are sold in the market.