VAT on schedule: India Inc

India Inc is hopeful that value added tax (VAT) will be introduced from April 1. It is, however, divided over when the central sales tax (CST) will be phased out.

In a CII survey of CEOs, nearly 87 per cent of the respondents were certain that following the release of a white paper by the Empowered Committee on VAT, the introduction of state level VAT would be as per schedule.

However, industry was divided over the issue of abolition of CST "" 40 per cent expected it to be phased out by 2007 while 35.6 per cent gave it one more year. Parthasarathy Shome, adviser to Finance Minister P Chidambaram, had expressed the confidence that VAT would be implemented from April 1.

However, Uttar Pradesh and Rajasthan have reservations over the imposition of VAT. Phasing out of CST is slated to be considered after one year of implementation of the new tax system. The official argument is that the CST cannot be abolished until there is an inter-state online information on movement of goods.

A majority of CEOs, who are national council members of CII, said the Securities and Exchange Board of India's move to not permit promoters to increase their stake in a company beyond 55 per cent through creeping acquisition without an open offer would not help in enforcing better corporate governance.

Earlier, the market regulator permitted creeping acquisitions up to 75 per cent.