No VAT, if states not ready: FM

Finance minister P Chidambaram today told Parliament that the existing sales tax system would continue in those states that were unable to implement value-added tax (VAT) from April 1.

"No state has communicated its unwillingness to pass the VAT legislation," Chidambaram said in a written reply. Uttar Pradesh, Uttaranchal, Jharkhand, Tamil Nadu, Mizoram, Nagaland, Himachal Pradesh and Chandigarh are yet to have their VAT legislation approved.

Replying to a query on special relief to small dealers and traders, Chidambaram said: "Small dealers with an annual turnover not exceeding Rs 50 lakh, who are otherwise liable to pay VAT, shall have the option of a composition scheme with payment of tax at a small percentage of turnover.

"As decided by the empowered committee, it is expected that a number of state level taxes on purchase or sales of goods, like state sales tax, turnover tax, purchase tax, additional sales tax, surcharge, entry tax (not in lieu of octroi) etc will be subsumed in VAT."

The latest status on VAT legislation is like this: five states -- Haryana, Rajasthan, Bihar, Tripura and Jammu & Kashmir -- have enacted the legislation, including an Ordinance, without presidential assent.

Whereas presidential assent has been communicated to 11 other states, namely, Madhya Pradesh, West Bengal, Kerala, Andhra Pradesh, Karnataka, Gujarat, Assam, Delhi, Maharashtra, Chhattisgarh and Meghalaya.

In Punjab, Orissa, Pondicherry, Manipur, Daman & Diu, Dadra & Nagar Haveli, the VAT legislation is ready and has been sent for Presidential assent.

In Arunachal Pradesh, Goa and Sikkim, the legislation has been approved by the state assemblies but is yet to be sent for presidential assent.

"The empowered committee of state finance ministers has decided to implement VAT and has finalised the VAT design, after prolonged deliberations and due consideration of advantages offered by the VAT system," Chidambaram said.