Other States
-
New Delhi
Delhi's threat led to VAT deferment
By Sujay Mehdudia
NEW DELHI, JAN. 27. The threat by the Delhi Government to pull out of the proposed Value Added Tax (VAT) regime in view of the vast anomalies and failure to accommodate its views was one of the foremost reasons for VAT to be deferred for one year. Now the State Government has gone ahead and sought transfer of all services to the States for levy of tax.
Credit for achieving this objective must go to the Delhi Finance Minister, Mahinder Singh Saathi, who not only did some plain talking but also adopted a tough stand at the meetings of the Empowered Committee on the issues concerning Delhi and its trade. It is well-known that without the participation of Delhi, the VAT regime would not have been successful in achieving its objective. Mr. Saathi had pointed out rightly to the discrimination against Delhi with regard to classification of goods and had warned against pushing it to the wall.
Mr. Saathi had stated the deviations by a number of States with regard to implementation of even the Uniform Sales Tax (UST), which the Capital's government had implemented in letter and spirit. The dispute arose after a number of States were able to secure concessions on certain commodities and get them adjusted in the lowest slab in the VAT context. However, the pleas of the Delhi Government were turned down, forcing Mr. Saathi to issue a threat of pull out. This worked with the Union Finance Minister, Yashwant Sinha, and the Chairman of the Empowered Committee, Asim Dasgupta, assuring Mr. Saathi that his interests would be protected as Delhi had to play a important role in the success of VAT.
Satisfied over the outcome of latest meeting of the Empowered Committee, which decided to defer VAT for one year, Mr. Saathi told The Hindu that with regard to tax on services, Delhi has conveyed that it does not agree with the recommendations of the Committee to transfer 51 services for taxation by the States. In general, he said, there should be a negative list which would contain services to be taxed by the Centre and which need to be exempted. The State should be permitted to tax all residuary services at a standard rate of a destination based VAT. This is the only way which a real VAT having no cascading effect can be implemented, he added.
Further Mr. Saathi said that Central Sales Tax and ``C Form'' has a vital role in eliminating the tax war between the States. It assumes importance in the matter of implementation of VAT. But unfortunately, the major setback in implementation of uniform slabs has been the power of the States to reduce the CST and exempt ``C Form''. If VAT has to be made successful then CST has to be at least uniform. If total withdrawal of CST is not considered feasible, then at least lower and uniform rate of CST must be adhered to by all States. Phasing out of CST in stages must remain on the agenda.
He said the ``C Form'' should not be left as a matter of choice for the States. It should be made mandatory and if the Centre has to bring in a legislation, it should do it forthwith. Delhi should be given parity with other States in the matter of CST, he demanded. Mr. Saathi said the report of the Committee with regard to tax on services was expected soon. The States must get their due and they should not be looking towards the Centre for even small matters.
Send this article to Friends by
E-Mail
Other States
|
