FM to release VAT `white paper' tomorrow

In what could be a major step towards introducing value aded tax (VAT) from April 2005, finance minister P Chidambaram will release a 'white paper' tomorrow on the new tax regime that has already got the approval of most state governments.

The proposal to switch over to the uniform, state-level VAT from next fiscal got a fillip in June last year when Chidambaram assured states that they would get 100% compensation for any loss in revenue during the first year.

State governments have since then geared up to draw the VAT legislations, pass it in assemblies and send it for Presidential assent.

The Empowered Committee of State Finance Ministers had been meeting frequently to discuss the white paper that would contain the structure of VAT apart from other procedural details.

VAT panel chairman Asim Dasgupta had earlier said the white paper has been finalised and the empowered committee has endorsed it. The paper would be issued on January 17, he had said.

The white paper would be published in English, Hindi and major regional languages. It would be made public to create awareness and remove misconceptions, if any, in the minds of the traders.

Some states like Uttar Pradesh, Maharashtra and Delhi along with trade bodies had expressed apprehensions on the white paper. UP, for instance, wanted modifications like raising the threshold limit for traders to register for VAT to Rs 10 lakh from Rs 5 lakh. It also wanted the limit for traders to pay the flat rate of 1% from Rs 40 lakh to Rs 50 lakh.