A nationwide value-added tax will be implemented from April 2005, a move that could increase revenues of states significantly and enable them improve their financial health.
"After going through the entire interactions, we can happily say that there is a broad consensus among states to introduce state-level VAT beginning April 2005," Asim Dasgupta, the chairman of Empowered Committee on VAT, said after a meeting with Finance Minister P Chidambaram in New Delhi on Friday.
The decision to switch over to the new tax regime was taken by the states after Chidambaram made 'certain comforting statements' regarding compensation, Dasgupta said.
Any possible loss on account of introduction of VAT or Central Sales Tax may be examined and compensated for on a positive attitude by the central government, he said referring to Chidambaram's assurance.
This was the first meeting on VAT after the UPA government assumed office.
VAT, whose implementation has been deferred more than five times since 2001, missed the last deadline of April 2003 as very few states were prepared with the legislations while many others did not consider it politically favourable before elections with stiff resistance from traders.
States had earlier demanded a package, including compensation for any loss of revenue when states switch over to VAT for which budgetary allocation was also made by the NDA government.
The meeting of state finance ministers with P Chidambaram follows his discussion with the chairman of Empowered Committee on VAT and West Bengal Finance Minister, Asim Dasgupta, a few days ago.
Though the Common Minimum Programme has expressed commitment for an early introduction of VAT, Chidambaram has made it clear that it would be implemented only after making all arrangements so that the decision becomes 'irrevocable.'
