VAT implementation as scheduled

CHENNAI: Union Finance Minister, P Chidambaram, has stated that the Value Added Tax (VAT) will be implemented as announced by the Central Government on April 1, 2005. "It is a modern system of taxation and nearly 130 countries worldwide, from Brazil, Sri Lanka to European Union, have benefited from implementing VAT in their respective nations and why not implement the same India?" he questioned.

Chidambaram was addressing a gathering of traders and businessmen here in a 'National Conference on State VAT for a common Indian market — Issues and Challenges' organized by the ASSOCHAM, Madras Chamber of Commerce and Industry, Cochin Chamber of Commerce and Industry and other regional groups of South India.

Clarifying the doubts raised by the industry people on the position of small traders and businessmen, he said that VAT is based on self-assessment among these groups and that VAT system of assessment is trader/business friendly and is based on documents produced by these small traders and businessmen. "Most of the apprehensions that prevails among the people would be evaded once the VAT system is implemented," he observed.

Further, Chidambaram said that out of 28 Indian states, 11 have already drafted their bills, which are on the approval stage for President's consent, and other states are in the process of drafting their state bills and have sought the help of the central government in drafting the new laws.

Speaking about the empowered committee on VAT set-up in July 2000 and chaired by West Bengal Finance Minister, Asim Das Gupta, Chidambaram said that the committee, which meets once in six weeks, will now meet once a month to discuss various issues and on the future Central Sales Tax (CST). This would be allowed to be evaded eventually.

"The CST will be allowed to continue for one-year period and the Empowered Committee would decide the future of the continuation of the CST in the next financial year and hoped the passing out of CST by 2006-07," he further informed.