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New Delhi , July 7

GOING by the indications in the first three months after the introduction of the value-added tax from April 1, the compensation to States on revenue-loss, if any, arising from VAT implementation, is likely to be much below the expected Rs 10,000 crore.

The compensation level will remain close to Rs 5,000 crore - a sum that had been earmarked in the Union budget for 2005-06, according to Mr Ramesh Chandra, Member-Secretary of VAT panel.

Speaking at a conclave on `VAT-Post Implementation Issues', organised by the PHD Chamber of Commerce and Industry here, Mr Chandra said it is expected that the northern States would not ask for any compensation, as many traders have not claimed credit for inventory at hand.

He said requests for compensation are expected to come from States such as Maharashtra where the average sales tax is 18 per cent and is expected to incur revenue loss on account of VAT implementation.

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