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FM to meet traders to allay fears over VAT

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Our Economy Bureau New Delhi
Last Updated : Feb 06 2013 | 5:33 PM IST
Finance Minister P Chidambaram is likely to meet traders from across the country to allay their fears over the value-added tax (VAT).
 
The minister told the Parliamentary Consultative Committee that there was political as well as economic consensus for tax reforms and that there had been steady progress on implementing VAT from April 1, 2005. The states are expected to be ready with their legislation over the next one month.
 
"The requirement to go in for tax reforms in consumption taxes in the states acquires greater urgency, as India gets integrated into the world economy. The domestic tax structure has to adapt, adjust and react to the changing fiscal environment of the developed and developing nations, in a situation of increasing globalisation," Chidambaram told the committee.
 
The minister said the VAT will remove the inspector raj as the system relied on self-policing and self-assessment. He said most traders would not fall under the ambit of VAT as the threshold turnover level was to be fixed at Rs 5 lakh.
 
Besides, traders with turnover up to Rs 40 lakh would have the facility of compounding, which would minimise the need for their detailed account-keeping.
 
Parthasarathi Shome, advisor to the finance minister, said all the taxes, except entry tax in lieu of octroi, would be merged with VAT.
 
The government has deferred the decision to abolish the central sales tax by a year. The government intends to launch a country-wide multimedia campaign to educate people on VAT.

 
 

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First Published: Dec 21 2004 | 12:00 AM IST

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