Business Standard

FM gets UP on board VAT

Mulayam gives nod, but says state's traders will have to be convinced

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Usha Bhattacharya Lucknow
Finance Minister P Chidambaram and the chairman of the empowered committee for the value-added tax (VAT), Asim Dasgupta, today managed to convince Chief Minister Mulayam Singh Yadav to implement VAT in Uttar Pradesh.
 
Yadav agreed to implement VAT, but with a rider that traders in the state would have to be convinced. He said "once traders are convinced, the state government will willfully implement it (VAT)".
 
Chidambaram and Dasgupta met Yadav in Lucknow for an hour, along with officials. The finance minister later told reporters the "meeting was fruitful and we sincerely hope that the matter will be resolved amicably".
 
He said, "UP government officials will meet Dasgupta in Kolkata next week to work out other details." This will be followed up by a meeting with the traders in Lucknow, which will be attended by all the parties concerned, including Chidambaram, Dasgupta and Yadav.
 
Chidambaram said the state government had raised two issues "" a technical issue (which the finance minister refused to divulge) and traders' concerns. He added that "the central government will convince the traders about VAT".
 
Chidambaram said 26 states had agreed to implement VAT and Uttar Pradesh's refusal might make things difficult.
 
Dasgupta urged Yadav to list the traders' complaints so that they could be addressed before the meeting with them early next month.
 
Earlier, the state had refused to implement VAT unless the central government agreed to compensate for the revenue losses. The UP government had suggested that the Centre abolish the central trade tax in phases, over three years.
 
Currently, UP has a share of Rs 700 crore in Rs 15,000-crore central trade tax. It was said that once VAT was implemented, the states would have forego this share.
 
The state government urged the finance minister to compensate for the state's losses in the next three years. This three-year period would have been enough for all the affected parties to absorb the shock.

 
 

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First Published: Nov 11 2004 | 12:00 AM IST

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