New Delhi: A nationwide Value-added Tax (VAT) 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 today (Jun 18, 2004).

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.