Sunday, March 13 2005 10:05 Hrs (IST) - World Time -

New Delhi: The Empowered Committee of State Finance Ministers on Value Added Tax (VAT) will continue to monitor and coordinate with States even after introduction of Value Added Tax slated from next month (April) across the country.

"The Empowered Committee has been registered as a society with State Finance Ministers as members," highly placed VAT panel sources said today (Mar 13, 2005).

The move assumes importance as it is seen as a precursor to the process of converging VAT rates of States with CENVAT rate of Centre to arrive at a single national VAT.

The ultimate aim of Government is to move from national VAT to a single Goods & Services Tax.

The VAT panel will be the forum for States to go for the "great bargain" with Centre on integrating State-level VAT with CENVAT and ultimately move on to Goods & Services Tax (GST).

Keeping the future developments in mind, sources said that the committee would be a "permanent body" that will periodically review the progress of VAT in States and strive to remove the obstacles that may crop up in future.

The VAT panel will have to fine-tune various clauses of VAT, as the need arises in future, they said.

In a changing economic scenario, the VAT panel may have to revise tax rates of a number of items, which are now of local importance but could graduate to international items like handicraft, vegetables, flowers and even some minerals.

"In a fast changing world, the shape and dimension of local goods itself changes. In such a scenario, the present tax matrix would need a relook," an official said.

The issue would emerge over the years, as States would like to augment their revenues over time.