TN wants losses on account of VAT compensated

CHENNAI: With the deadline for switching over to Value Added Tax (VAT) only months away, Tamil Nadu has expressed serious reservations over its implementation mainly on account of the losses the state will have to incur in the process.
Although Tamil Nadu has committed itself to meet the April 1, 2003, deadline for implementing VAT, state Finance Minister C Ponnaiyan has emphasised that the centre should compensate the state for the losses it would suffer on account of implementing VAT.Explaining the state Government''s stand on the issue at a seminar organised by FICCI here, he said the major issue in the introduction of VAT was the abolition of central sales tax (CST) and the revenue neutral rate of 12 per cent.
The state would lose at least Rs 800 crore to Rs 900 crore annually on account of CST alone once VAT was introduced, he said, adding that the state Government was not for dispensation of CST under VAT, if not compensated adequately.
Ponnaiyan also opposed the move to bring services under VAT, pointing out that major chunk of the service tax from sectors like telecom, banking and insurance and electronic media would go to the central kitty.