With or without VAT, IT system to work

In some solace to the empowered committee of the state finance ministers on VAT, there’s an assurance from all the states that the VAT ...

In some solace to the empowered committee of the state finance ministers on VAT, there’s an assurance from all the states that the VAT IT system — TINXSYS — will be in place independent of whether the state is implementing, or not, the new tax system from April 1.

Talking to The Indian Express, member secretary of the empowered committee Ramesh Chandra said the IT system will be in place in all the states. “In fact, Chandra said that among the BJP-ruled states, in Madhya Pradesh and Gujarat, the pilot project is operating in full swing”, he added.

With or without VAT, the states will benefit from the IT system since it will help them to tackle tax evasion to a great extent by tracking all the inter-state transactions. However, the empowered committee has stuck to its decision to stick to the VAT deadline of April 1, 2005, inspite of eight states — Madhya Pradesh, Rajasthan, Chattisgarh, Gujarat, Jharkhand (all BJP-ruled states) and Tamil Nadu, Uttar Pradesh and Mizoram – stating that they will not implement VAT on April 1.

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Finance Minister P Chidambaram will hold a final meeting of the empowered committee on Thursday in which even the BJP ruled states are expected to attend. Both the FM and the empowered committee will make a final effort to pursuade the states to join VAT from April 1.

For the BJP-ruled states, the empowered committee is making all efforts to pursuade them. According to chairman of the empowered committee Ashim Dasgupta and member secretary Ramesh Chandra, some of these BJP states are best equipped at present to implement VAT. “In fact, the legislation of Uttaranchal, for example, is the best state legislation. It is crisp and simple,’’ a member of the empowered committee added. Dasgupta on Tuesday said that he was taken by surprise by the announcement of the BJP ruled states on Saturday, considering the fact that some of these states were in the forefront of the movement to introduce VAT. “In fact one state had moved forward so far, that it deployed its experts to educate other states,” Dasgupta added.

	TN for compensation and set-off

			• New Delhi: According to a member of the empowered committee, though Tamil Nadu is not implementing VAT, it has agreed to offer 100 per cent self assessment and also set off. These are crucial components of the VAT regime and will help to reduce confusion for the neighbouring states of Tamil Nadu which will implement VAT, ie Karnataka and Kerala. “This is what is needed. You may call it VAT or non-VAT, but if the other non-VAT states offer these two components, we are done”, a member of the empowered committee added. — ENS

Agreeing that some confusion will be there in the beginning after VAT is implemented in most of the states, a member of the empowered committee explained that if a good moves from a VAT state to a non-VAT state, there will be no offset and the VAT state will charge a central sales tax only.

However, in the non-VAT states there will be multiple taxes which were proposed to be subsumed under VAT. “That is why, the non-VAT states will lose out and new business will all shift to the VAT states”.

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Dasgupta also added that “states that will implement VAT only stand to gain.” Citing an example, Dasgupta said in West Bengal, for example, the average incidence of sales tax is about 15 per cent. Under VAT, the average effective levy (inclusive of input credit) will fall to about 10 per cent.

(Inputs from Sanchita Das in Kolkata)

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