Gujarat to adopt wait and watch policy on VAT

The state government had decided to adopt a wait and watch policy on the implementation of Value Added Tax (VAT). The government said that the interests of the state will not be sacrificed by rushing into implementing VAT.

"Why should the Gujarat government harm its interests by rushing in and accepting the VAT regime. Gujarat will not implement VAT unless all the state decide to implement VAT," a senior minister in the Gujarat government said.

This would effectively mean that VAT will not be implemented from April 1. The decision to introduce VAT was publicly discussed first in a conference of state chief ministers and finance ministers in November 1999. Then, the deadline of April 2002 was agreed upon to bring in VAT.

However, state government sources pointed out that the issue of VAT was not discussed, when state finance minister Vajubhai Vala, finance secretary Manjula Subramanian and other officials met officials the Planning Commission.

"No, the issue was not discussed at Thursday's meeting in Delhi, but we will inform the central government that Gujarat will adopt VAT only with other states. In fact, without the 'approval' of the state government, it will be very difficult for the Centre to implement VAT in the country," said a minister.

Meanwhile, in Surat, Union textiles minister Shankarsinh Vaghela evaded giving a direct reply. However, in reply to a question on abolition of octroi (which is prevalent in all municipal corporation limits of the state), Vaghela said -"Octroi is a state-subject, and it is for the state government to decide whether octroi is abolished or not. Personally, I believe that when VAT is implemented, octroi duty is not required."