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Our Bureau

New Delhi , July 8

THE Finance Minister, Mr P. Chidambaram, today said that he would evolve a formula to determine the compensation for any loss of revenue to States arising from their proposed transition to the Value Added Tax (VAT) regime from April 1 next year.

Allaying fears among States regarding revenue loss following their shift to the VAT regime, Mr Chidambaram quoted international experiences and that of Haryana to assert there would be no loss of revenue to States from their proposed transition to the new tax regime.

Haryana, the only State to shift to a VAT regime, had reported a 20 per cent increase in VAT collection during the last fiscal. Mr Chidambaram also offered the services of a Technical Experts Committee to the States, which, he said would work with them and help them in implementing VAT.

Even as Mr Chidambaram comforted States on the compensation issue, he did stop short of making a budgetary allocation under the `compensation to States for revenue losses due to introduction of VAT'.

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