Uniform VAT rates sought

The empowered committee of state finance ministers on the value-added tax (VAT) has convened a meeting of sales tax commissioners of all states next week to address the discrepancies in the new tax regime.

"We have invited sales tax commissioners of all states on April 15 to try and see if we can move towards a common uniform position on some issues," a member of the empowered committee told Business Standard today.

The official said the meeting was convened after traders had claimed that different states were adopting different VAT rates for products.

"Although the committee has made clear that any item, which is not included in the 0 per cent, 1 per cent or 4 per cent VAT rate, will automatically come under the 12.5 per cent rate, some states have put similar items under different rates," the official said.

Similarly, different states have imposed different tax liabilities under the composition scheme, which is available to traders with a turnover of Rs 5-50 lakh.

Traders opting for the scheme only have to pay tax equal to a small percentage of the gross turnover, and are not entitled to input tax credit.

"While some states have put the liability at 0.5 per cent of the gross turnover, others have put it at 0.25 per cent," the official said, adding that efforts would be made towards having a common view on these issues.

On the issue of canteens of the armed forces being exempted from the VAT, the official said the issue had been examined by the finance ministry in the past and the general view was that there were leakages in the system, causing revenue loss to states.

"The committee is of the view that the Centre should consider extending subsidy in some other form to the armed forces rather than through the canteens," the official said.