UP, TN govts refuse to budge on VAT

The governments of the states of Tamil Nadu and Uttar Pradesh have persisted with their refusal to implement the Value Added Tax (VAT) regime, even as five BJP-ruled states, Rajasthan, Madhya Pradesh, Chhattisgarh, Gujarat and Jharkhand are now VAT states.

"Uttar Pradesh will not implement the VAT system," said UP Chief Minister Mulayam Singh Yadav categorically in Lucknow today.

The state's economic advisor, Banwarilal Kanchal, said there had been an increase of 18 per cent in sales tax revenue in Uttar Pradesh in the last financial year and there was no question of implementing VAT in the state.

The five BJP-ruled states had earlier refused to go along with implementation of VAT, citing protests by traders and absence of a clear-cut roadmap for abolition of central sales tax (CST).

The CST was earlier scheduled to be reduced to two per cent from this fiscal against the present four per cent and eventually phased out by fiscal 2007-08.

However, the empowered committee on VAT had to set up a working group on phasing out CST due to lack of consensus between states and the Centre. Most BJP-ruled states, especially Chhattisgarh, had kept this as one of the pre-conditions for joining the VAT regime.

"Our preconditions have been met and we will be joining VAT," said a government official of the state.