The Hindu : VAT will wait

Online edition of India's National Newspaper
Tuesday, Mar 11, 2003

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VAT will wait

By Our Staff Reporter

NEW DELHI MARCH 10. The word is finally out. It is almost certain that the Value Added Tax (VAT) regime will not come into effect from April this year in Delhi. The three-member Cabinet sub-committee on VAT, which submitted its report to Chief Minister Sheila Dikshit today, is understood to have called for postponement of the VAT regime till all the anomalies in the draft Bill and issues relating to Delhi are sorted out.

Now the matter may be taken up by the Delhi Cabinet later this week and a final decision is expected before the commencement of the Budget session of the Delhi Assembly on March 17. But with the legal fraternity opposing the draft in its present form, the traders are not in a mood to compromise and with the crucial Assembly elections only a few months away, there is little possibility of VAT being implemented this year.

The three-member sub-committee headed by the Finance Minister, Mahinder Singh Saathi, was constituted following objections raised by the trading community and party MLAs over the implementation of VAT and the difficulties it would cause to traders in Delhi. It was claimed that with the implementation of VAT regime, the distributive character of Delhi would stand badly affected and things would take a turn for the worse. The legal fraternity had also protested against certain provisions in the draft Bill and had sought its deferment in order to set right the situation before going ahead with such a big change in the taxation system. Delhi being the centre point for distribution of goods all over the country, the present law was not in interest of the Capital and a second look was must to avoid any damage to the trade and revenue.

The sub-committee, also having the Power Minister, Ajay Maken and the Industry Minister, Deep Chand Bandhu, interacted with a cross section of society including lawyers, chartered accountants, traders, chambers and associations over the provisions of VAT and its implications with regard to Delhi. An overwhelming opinion was that VAT regime should be deferred for another year and all the repercussions it would have on the trade in Delhi should be carefully studied before adopting it for implementation.

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