AP industry dept adopts 'wait-and-watch' stance on VAT

The competition among top rung states in attracting investments is creating a situation where each of these states is waiting for the other to pass their VAT (Value Added Tax) Act before they came out with their own version.

The latest to join the 'wait-and-watch' game is Andhra Pradesh, which just a couple of weeks ago, had volunteered to bring about an ordinance on VAT implementation.

Now that the scope for issuing the ordinance no more exists as the budget session of the state legislative Assembly is round the corner, the industry department has requested the Finance Minister not to introduce the VAT bill in the House till such time as other states come out with their VAT Act.

Industry department officials have sent a note to the Finance Minister a couple of days ago saying that announcing the bill without knowing what states like Gujarat and Maharashtra would implement may help them take advantage of formulating a more attractive incentive packages to attract investments.

Similar apprehensions have ensured that the draft of the new industrial policy, which is to be implemented from April 1, 2005, has also not been made public. In fact, industry officials were puzzled when the commercial taxes department recently went ahead and issued an ordinance on VAT.

"Our draft Act was finalised based on a similar Act promulgated by the state of Haryana, which is not a fair comparison as it is not an industrialised state like Gujarat. Why should we behave hastily when those states are still sitting pretty on their respective VAT bills," a state industry department official points out.

But the commercial taxes department thinks other wise. "There is little scope for any big deviations while passing the Act by states as the empowered committee has already set a clear cut framework and guidelines in this regard. Moreover, each and every state has to pass the Act and there is no exemption to anyone on this count. Then why worry," says a senior official of the commercial taxes commissionarate.

Industry officials feel that there is more than what meets the eye in other states delaying VAT bills, though the deadline for passing the Acts is only 40 days away.

"The West Bengal government has issued a letter to a firm, promising that all the existing incentives will continue even after the introduction of VAT a couple of days back. So we need to be extra cautious before disclosing our own plans and proposals," an industry department official said.