VAT skips April 1 deadline

The VAT dilemma continues. The implementation of VAT has once again been put on hold with states unable to meet the deadline of April 1, 200...

The VAT dilemma continues. The implementation of VAT has once again been put on hold with states unable to meet the deadline of April 1, 2003. West Bengal Finance Minister and chairman of the state finance ministers’ empowered committee on VAT Ashim Dagupta said in a statement from Kolkata that a meeting of the committee has been convened in Delhi on April 8, to discuss and finalise a new date for implementation of VAT.

Union finance ministry officials, however, maintain that VAT is a state subject and it is for state governments to implement the new tax regime.

“The April 1, 2003, deadline was decided by the empowered committee. The Central government is only a facilitator. The commitment has been deferred twice and the international community is watching our commitment to policy,” said a senior official.

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There is also a growing concern in finance ministry that a truncated implementation of VAT would create more confusion than facilitating and simplifying the tax system in states.

Sources said that, as part of a package, the Centre has promised to reduce central sales tax from 4 to 2 per cent after VAT is implemented by states. If only some states implement VAT, it would not be possible for government to have differential sales tax which would be “discriminatory”, they added.