New Delhi: The empowered committee of state Finance Ministers will sort out unresolved issues including the rate of tax on life-saving drugs, naptha and maximum retail prices of essential items at its meeting on April 23 to ensure smooth implementation of value added tax (VAT) from June.

"All problems will be sorted out and a final view will be taken in April 23," the VAT panel's secretary Ramesh Chandra said at a Confederation of Indian Industries (CII) meeting.

Prior to the meeting of state Finance Ministers, there will be an officers' meeting on April 22, which would take up all the contentious issues.

"We are trying to compress the time frame. It is difficult to implement VAT in three months," Chandra said.

States missed the April 1 deadline for implementing the nationwide VAT regime due to lack of preparedness, disputes over various taxation issues and agitation by traders.

More than 20 states were ready with their VAT Bills, while some cited elections and other administrative bottlenecks to justify the deferment of VAT till June 2003. "There was major deviation of states' VAT bills from the standard format," Chandra said.

Additional secretary (revenue) Anupam Dasgupta said the government in consultation with the empowered committee can "re-fashion" the legislative and procedural aspects by June.

He said issues relating to VAT rates on important items like pharma and naptha would be taken up at the next meeting.

Pharma companies wanted all medicines to be taxed at four per cent rather than the 12.5 per cent revenue neutral rate.

Similarly, fertiliser companies wanted naptha to be treated as an input and hence taxed at four per cent instead of 20 per cent.

PTI