Financial Daily from THE HINDU group of publications
Wednesday, Apr 27, 2005

Port Info

Group Sites

Industry & Economy - Taxation

`Trade response to VAT disappointing'

K. R. Srivats

New Delhi , April 26

THE Empowered Committee of State Finance Ministers on Value Added Tax (VAT) has expressed disappointment over the trade response to the implementation of VAT.

"I am slightly disappointed with trade over its response to VAT implementation. Trade is being stubborn. They do not want to understand the VAT system," Mr Ramesh Chandra, Member-Secretary of the Empowered Committee, said.

He was addressing a seminar on VAT organised by the Northern India Regional Council of the Institute of Chartered Accountants of India here on Sunday. Mr Chandra said that the VAT design is not inferior to the earlier sales tax system. "It is simpler and would not result in increase in prices, unless the middle man plays mischief."

Mr Chandra, however, admitted that there are ground level difficulties. "We do understand that there are some implementation issues. This would be sorted out. The job of the empowered committee is not over with the introduction of VAT alone," he said.

Stating that the Union Government is keen to ensure the successful implementation of the new tax system, Mr Chandra highlighted that the Centre had already promised that it would compensate the States for losses that may arise from the introduction of VAT.

"I have been assured by the highest functionaries of the Finance Ministry in my meeting with them on Saturday that the Centre was ready, if need be, to cough up Rs 6,000 crore or even Rs 7,000 crore towards compensation," Mr Chandra said.

He pointed out that the Centre would not just go by the word of the State Governments on the issue of losses. "The Accountant General of the concerned State would have to certify the loss, if any, and this has to be subsequently audited by the Comptroller and Auditor General of India," he said.

The Centre has provided a sum of Rs 5,000 crore towards compensation to States on account of VAT implementation for 2005-06. Mr Chandra also made it clear that some degree of audit (above a specified limit) would have to be undertaken by VAT administrators on the books of accounts of traders.

Further, he also held that VAT should not be blamed for every price increase in the economy. "If steel prices have gone up, then immediately the finger is pointed at VAT. You should also take into account the increase in excise duty on steel to 16 per cent and its impact on prices," he said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Project for youth in AP

The great growth story
Hiccups, yet Mumbai marches on!
Starting up a brand new day
City of Hope
Why financial planning?
ESCAP pegs India's GDP growth rate at 7.5 pc
Plan panel to prepare discussion paper on regulatory regime
Shipping Ministry urged to carry out studies for Sethusamudram project
Saving the turtle
`Time to come out with FDI-based ties with Japan'
Aiyar to visit Pak next month
AP raises ESI limit on super-speciality treatment to Rs 1 lakh
Nursing Council directive
USAID to help develop pool finance structure in Bengal
Govt to build 42 flyovers in Mumbai
Salem Steel Plant aims at 40 pc increase in production
`Viability is key to investment in melting shop'
Left parties urge Govt not to raise petro prices
Development, expansion of Tapti gas field: British Gas-ONGC-Reliance joint venture plans to invest $500 m
Power Tariff Policy to be finalised soon
Orissa not to allow setting up of new sponge iron units
Some mass consumption items exempted from VAT — Consensus reached on convergence of rates
VAT: Promos on consumers' rights soon
`Trade response to VAT disappointing'
Commonwealth SME meet — enterprising
Nickelodeon in tie-up with Bombay Dyeing
Western Australia keen on biotech alliances
`East can attract $125 b investment in minerals'
Resurgent India
`Investment boom will follow Japanese PM's visit'
CII-APTDC workshop
Guatemala takes flavour off cardamom exports
EU to launch probe into sharp surge in Chinese textile imports
IOC to step up crude import from Iraq
Services Export Promotion Council gets off the ground — L.B. Singhal is Executive Director
Global demand for eco-lodges expected to rise by 10 pc
Airport officials taught to be tourist-friendly

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line