Dasgupta determined to implement VAT

WEST BENGAL BUDGET 2005

The West Bengal government will implement the value added tax from April 1 and will not be deterred by the recent anti-VAT stand of few states. This was disclosed by the state finance minister Ashim Dasgupta at the post budget press briefing that was dominated by VAT related issues.

Terming the move of the five BJP ruled states as 'extremely surprising', Dasgupta made it clear that VAT will be implemented in the country as per schedule. The state finance minister, who is also the head of the empowered committee of the state finance ministers, claimed 21 states out of 28 in the country are ready to implement VAT from April 1.

The empowered committee of the finance ministers has already convened a meeting of all state finance ministers on March 24 to discuss the issue.

"There is no question of backtracking in VAT. Majority of the states have agreed in this. In fact the five BJP ruled states also agreed earlier but I do not know what has happened to them. We shall keep requesting them to join us in due course. I hope they will join us later," he added.

Dasgupta also ruled out the possibility of revenue shortfall due to VAT by saying that VAT is likely to be revenue positive for the state. "We shall try our best so that it is revenue positive," he said.

Incidentally, the union government has already assured that in case of revenue shortfall, it will be compensated fully in the first year.

Defending VAT, the finance minister said that it will be good for both traders and industries as the effective rate will come down. According to him, the peak rate of sales tax is 15 per cent in West Bengal.

The general rate under VAT will be 12.5 per cent. "The effective peak rate will be less than 10 per cent because of the credit facility," he said.

Dasgupta said out of total 550 commodities, about 50 items will belong to the exempted category.

Around 270 items will have VAT rate of 4 per cent and the remaining will be included under general category of 12.5 per cent. Dealers with gross turnover of Rs 5 lakh will not come under VAT.

"The VAT rate will be lower than sales tax but I hope that revenue will increase because of the batter tax compliance. It will effectively combat tax evasion," he added.