Prices likely to fall in post-VAT scenario

The prices of almost all goods are likely to fall by one per cent across the country after the introduction of value added tax (VAT) from April 1.

"There is no likelihood of prices going up in the post VAT scenario. On the contrary, prices are likely to fall by one per cent after April 1," Ramesh Chandra, member-secretary of the empowered committee of state finance ministers, said today.

"The rumours spreading on price hike in the post-VAT system are a misconception. VAT would rationalise the tax burden and bring down the general price level when all the components of the system design are taken together," Chandra said.

"At present, there is an unhealthy competition between states with regard to tax rate and trade diversion. VAT is expected to stop this trend," he added.

A comprehensive campaign at the state-level would be launched to communicate the benefits of VAT for common people, traders, industrialists and also state governments in regional languages, Chandra said. "The campaign will be launched at a national level on the basis of  necessary co-ordination between the state and the centre. The campaign will carried out through regional newspapers, radio channels and other modes that reach the common people," he said.

The centre has alloted Rs 25 crore to various states for publicising the advantages of VAT, and Maharashtra has got the maximum amount of Rs 1 crore for VAT publicity campaign, Chandra said.