VAT trips at 11th hour, new date likely on Apr 8

It''s official. Value-added tax will not be implemented from April 1, ''03 in any of the 26 states that had agreed to the deadline. The empowered committee of state finance ministers will meet again in Delhi on April 8, to set a fresh deadline and a new roadmap for the implementation of VAT.
Twenty-six of the country''s 28 states had asked for Presidential asset for the introduction of VAT in their respective states from April 1.
But the now on-now off, tax reform system faced last-minute hitches and opposition from a cross-section of business and trade in several states, forcing governments to push the April 1 deadline back at the 11th hour.
At a hurriedly called press conference here on Monday, West Bengal finance minister, Asim Dasgupta, who is also the chairman of the empowered committee, said, "We are surprised that the Presidential assent has not reached us till now despite repeated commitment to this effect. We are, however, confident that it will come very soon. The April 8 meeting will only decide on the next date for the introduction of VAT across the country."
"This additional time has actually come as a blessing in disguise. And we will utilise this interim period to create awareness in favour of VAT, convincing the business community that it will be to their benefit and remove misgivings on the issue," Mr Dasgupta said. He also urged the business community to call off its two-day trade bandh.
"Small businesses and trading activities with an annual turnover of up to Rs 5 lakh are completely out of the purview of VAT. Businessmen and traders whose annual turnover is between Rs 5 lakh and Rs 25 lakh will have to pay marginal VAT. But surprisingly, even small shops and outlets are backing this strike without knowing the implication of the move," he said.
Branding the proposed introduction of VAT as, "the right step in the right direction," Mr Dasgupta said only two states who were going to polls shortly were opposing this for "narrow political reasons".
He said all 125 countries, where the value-added tax system prevailed, had faced similar problems in the transitional phase. But later, everybody benefited. "Only those who are used to evading tax, can resist this. Because tax evasion is very difficult under the proposed system," the West Bengal finance minister said, adding that if someone paid less input tax or evaded that amount, the set-off would also be lower.
Allaying apprehensions that if all the states did not implement VAT uniformly, the ultimate effect would be "unpredictably inflammatory" and prices of some FMCG products could go up, Mr Dasgupta said, "The fact that 26 states had asked for Presidential assent and took the pains of drafting the VAT Bill for their states should allay all fears over the new reformed tax system," Mr Dasgupta said.