Financial Daily from THE HINDU group of publications
Thursday, Apr 17, 2003
Financial Daily from THE HINDU group of publications Thursday, Apr 17, 2003 |
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Industry & Economy
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Taxation Post-VAT: States may decide on ST sops on April 23
Ashwini Phadnis
NEW DELHI, April 16 STATE governments were expected to take a final decision on the contentious issue relating to the treatment of existing sales tax exemptions in a post-value added tax (VAT) regime on April 23, the Secretary of the Empowered Committee of State Finance Ministers on VAT, Mr Ramesh Chandra, said here on Wednesday. Admitting that Gujarat and Maharashtra were pursuing an approach different to that of all other States on the matter of ST exemptions, Mr Chandra said, "The situation is similar to the resolution on Iraq at the United Nations Security Council." While Maharashtra and Gujarat are advocating retention of exemption scheme, although in a slightly modified manner, the other States are only interested in switching over from exemption scheme to the deferral scheme. Mr Chandra was addressing a meeting on VAT organised by the Confederation of Indian Industry (CII). Industry sources pointed out that Gujarat and Maharashtra were pursuing a different route on account of strong industry interest in the retention of the exemption scheme. "I cannot hold out any hope on the direction in which the Ministers will agree. All that I can say is that a final decision will come about on April 23," Mr Chandra said. He also told CII members that the State Governments would not levy VAT/sales tax on the "AED (Additional Duties of Excise) items" — tobacco products, textiles, and sugar — until April 1, 2004. "The Empowered Committee has taken a decision on April 8, this year that VAT will not be imposed on AED items until April, 1, 2004 even if the Centre was to empower States to levy such an impost," Mr Chandra said. Going by Mr Chandra's statements, April 23 would be a red-letter day in the history of VAT implementation in the country as many contentious issues were to be debated and hopefully finalised on that day, a CII member said. The issues that are likely to be decided include the VAT treatment on medicines, the matter of maximum retail price (MRP) items and the treatment of naphtha as an industrial input instead of petroleum good.
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