Relook into Maharashtra VAT claims

State's accountant-general told to verify compensation claims of Rs 2,200 crore.

Faced with outstanding compensation claims of over Rs 2,200 crore by Maharashtra for losses due to the introduction of the value-added tax, something that could wipe out the Centre's entire value-added tax (VAT) compensation kitty for the current fiscal, the finance ministry has now asked the state's accountant-general to verify the numbers projected.

The ministry has questioned the state's claim that the high compensation amount was partly on account of the Rs 1,500-crore tax refunds.

The state had forwarded a compensation claim of Rs 1,146 crore for the period July 2005-January 2006, which was processed and released by the Centre. It subsequently forwarded a second claim of Rs 2,225 crore for February-March, taking its total compensation claims for the July-March period to a whopping Rs 3,340 crore.

The Centre had received a compensation claim of Rs 95 crore from Bihar for the month of March 2006. The state has already received compensation of Rs 166 crore for the earlier months.

Officials said a compensation claim of Rs 3 crore for Sikkim for the period July-September 2005-06 has been released this month by the Centre.

Last month the Centre had cleared a claim of Rs 236 crore for Kerala for the period December 2005-March 2006.

The revenue department has already prepared a proposal to increase the compensation package for the current fiscal by another Rs 3,000 crore in the wake of higher compensation being sought by the states.

The government had, in its Budget, set aside Rs 3,000 crore to compensate states for losses under VAT. According to the road map, the Centre is obliged to only compensate up to 75 per cent of the losses suffered by the states this fiscal.