Delhi defers decision on lowering VAT on bullion

The Delhi government on Thursday deferred a decision on lowering VAT rate on bullion by 15 day after the empowered committee assured that it would persuade Gujarat, Rajashtan, and Uttar Pradesh to raise tax on precious items to one per cent, on par with other states.

"Empowered committee chiarman Asim Dasgupta assured us that he would take up the matter with the chief ministers of the three states by the first week of September. As such, we will wait till then (before taking any decision to lower VAT rate on bullion),"said,A K Walia, Delhi finance minister.

The empowered committee has decided that it would meet chief ministers of eight "non VAT" states from September to persuade them to switch over to the new tax regime, Dasgupta said.

The agenda also includes persuading these states not to deviate from uniform floor rates of taxes, Dasgupta said.

"Representatives of Rajasthan, Gujarat and Uttar Pradesh were there at the meeting. We will discuss the issue with the political leadeship when we visit these states," he said to a query over non-implementation of uniform floor rate of one per cent by the three states.

"VAT chairman assured us that a final decision in this regard would be taken by first week of september," Walia said.However, Dasgupta refused to divulge whether he has given any timeframe in this regard.

Walia also said he would apprise Delhi chief minister Shiela Dikshit and the cabinet about VAT panel's decision."Let us see what happens after that," he added.

Delhi and some other states like Maharashtra have complained to the VAT panel that their bullion trade is shifting to Rajasthan and Gujarat since they have 0.25 per cent sales tax on precious metals compared to one per cent VAT rate in other states.

After Gujarat and Rajasthan, Uttar Pradesh has also lowered sales tax on bullion. It has come out with a scheme of 0.15 per cent composite tax on bullion.After the last VAT panel's meeting on 9 July , Walia had stated that he would wait till August 1 before deciding to lower VAT rate on precious metals.

He, however, deferred the decision till today and once again decided to wait for 15 days more after the VAT panel assured that it make the other states raise their tax slab.

However, Maharashtra sales tax commissioner B C Khatua said: "We have been disappointed by (empowered committee's decision). We have not emerged any wiser from the meeting."

However, he did not say whether the state would lower the VAT rate on bullion since the decision is the jurisdiction of the government. Khatua represented Maharashtra today in the VAT panel's meeting.

Delhi will lose about Rs 50 crore this fiscal because of shift in bullion trade, while Maharashtra is losing about Rs 40 crore.