No roll-back of VAT rates, says panel

None of the states reported a rise in prices; Chandra rules out possibility of new tax rate.

The empowered committee on the value-added tax (VAT) today ruled out any roll-back in the tax slabs and said the variation in rates across various states was not very significant.

"If you take the 21 states together that have implemented the VAT and not one or two states separately, the variations are not very significant," empowered committee Chairman Asim Dasgupta told reporters after a meeting with sales tax commissioners from different states.

Dasgupta said today's meeting was confined to "absolutely official reporting" about the latest details after the VAT came into effect from April 1.

"The reporting has been very exhaustive," he said, adding that the committee would take up the issues of concern in tomorrow's meeting with state finance ministers. Finance ministers from states such as Uttar Pradesh that have not signed up VAT are expected to participate in the meeting.

Dasgupta said the meeting with officials also looked into complaints of price rise after the VAT was implemented. He declined to give details of the disparities in tax rates among states and said he would comment only after discussing with state finance ministers.

The empowered committee's secretary, Ramesh Chandra, however, said none of the states had reported a rise in prices after the VAT was introduced, and in the case of some items the prices had, in fact, reduced.

He also said there would be no change in the tax slabs specified in the white paper. Chandra also ruled out the possibility of a new tax rate of 8 per cent saying no state had made such a demand. When asked about the VAT rate of 20 per cent on oil products, Chandra said the present rate would continue.

States like Delhi have raised concerns over 20 per cent tax on diesel and have complained that this has resulted in about 50 per cent fall in sales as neighbouring states are still continuing with the 12.5 per cent rate.

The Delhi government had said it would take up the issue with the empowered committee as it has affected the state's revenue and the interest of traders.

Sales tax officials from almost all the states, including those from the non-VAT ones, and senior officials of the union finance ministry were present in today's meeting. As of now, 21 states and union territories have implemented VAT.

Five Bharatiya Janata Party-ruled states Gujarat, Madhya Pradesh, Rajasthan, Jharkhand and Chhattisgarh, along with Uttar Pradesh, Tamil Nadu and Uttranchal have not implemented VAT.

Andaman and Nicobar Islands and Lakshwadweep will not implement the VAT as they do not have a sales tax regime. Four states -- Assam, Meghalaya, Pondicherry and Chandigarh -- are yet to implement the VAT.

While three of these are likely to introduce the new tax from May 1, Chandigarh has said its VAT implementation is linked to Punjab.