Only eight out of 16 states, which have agreed to implement Value-Added Tax from June 1, have passed legislations on the issue so far, Finance Minister Jaswant Singh said in Lok Sabha on Friday.
These legislations, which were based on a standard model prepared by the Centre, would be sent to the President for his assent, he said during Question Hour.
Maintaining that VAT was essentially a state tax to replace sales tax, he said the government had carried out a survey of about 63 countries, which had implemented such tax, and found that there had been no increase in prices in these nations, barring one.
He said the Centre would compensate the revenue loss of states, if any, when VAT was implemented to replace the sales tax system at the rate of 100 per cent in the first year (2003-04), 75 per cent in 2004-05 and 50 per cent in 2005-06.
Therefore, the question of any revenue loss and compensation does not arise in case of non-implementation of VAT, Singh said, adding only Haryana had reportedly introduced VAT from April 1.
An empowered committee of state finance ministers was set up to deliberate on matters relating to implementation of VAT, he said, adding this panel, which meets from time to time, would take any decision on matters relating to VAT implementation and representation of trade and industry in this regard.
