The meeting of the Empowered Committee of State Finance Ministers which met here yesterday has decided to implement Value Added Tax (VAT) system from June 1, 2003. The central government has announced that it will compensate for the revenue loss if any to the states during the first year of implementation. Asim Das Gupta, the finance minister of West Bengal, chaired the meeting.
Immediately after the meeting, finance ministers from Kerala, Maharashtra, Andhra Pradesh and Orissa confirmed the implementation of VAT from June 1. VAT was to come into affect from April 1, 2003 but the implementation was deferred following protests from some states and trading community.
The Centre gave an assurance to reduce Central Sales Tax from 4.0 to 2.0 per cent after VAT is implemented by states. The Centre had already promised to fully compensate revenue loss of states in the first year and provided Rs 700 crore for 2003-04 in the Budget.
In a related development, a five-member committee of senior BJP leaders was constituted today to go into the issue of VAT and take up the matter with Finance Minister Jaswant Singh.
The Committee will call upon the Finance Minister to apprise him of the widespread protests against VAT and other issues affecting small businessmen.