With majority of state governments deciding to adopt a wait-n-watch stand by postponing their plans to implement the VAT (Value Added Tax) regime, the uncertainty over the implementation of the new tax structure is to continue for many more months. Even the states which have decided to go for VAT are yet to come out with necessary notifications, it is learnt. All eyes would be on the forthcoming review committee meeting of the Empowered Committee on April 8, 2003, where the state ministers are to get together to attempt another consensus on the implementation aspects of the VAT system.

Speaking to pharmabiz.com, Ramesh Chandra, member secretary, Empowered Committee on VAT, informed that the ball is in the state governments' court and the Centre's role would be to assist the states in sorting out any specific problems or hurdles which they have been facing in the course of implementing the new system. “Though we have asked the states and UT s to switch over to the new tax regime, the implementation of the same is solely their responsibility. We are not here to impose anything on the states”, he said.

The decision has to come from the chief ministers, finance ministers and the governors of various states. There has to be consensus at the state level itself. The empowered committee can try to chalk out the problems being faced by the states while implementing the reforms. The next meeting of the committee would try to learn the issues before the states and try to assist them in overcoming their problems, he explained.

Responding to the query based on the demand from the drugs trade sector to bring down the tax bracket of medicines and thereby reduce the possible price hike on life saving drugs in many parts of the country, Chandra said that “medicines” are not the “only” life saving commodity that are in the list. He pointed out that of the 2000 odd commodities, all of which have been placed under several tax structures, the case of drugs is just one among scores of other cases demanding less tax burden. He felt that any discussion to consider the case of medicines as “unique” cannot be taken seriously as they need to approach the issue in a broader manner.

He felt that the fears expressed from various quarters on the chances of the states losing revenue on account of switching over to the new tax regime was misplaced. He felt that it could even be the opposite. He opined that the states that are not able to introduce VAT could be the losers.

According to the member secretary, there was no need for the Centre to announce a formal extension to the deadline, as the situation would be the same even without any announcement if the states were not willing to adopt the change. With the entire trading community calling for a two day All India Strike, and the drugs trade sector announcing their plans to go for indefinite strike from April 15, 2003, even a formal announcement, deferring the dates wouldn't come as a surprise.