Monday, July 4 2005 16:00 Hrs (IST) - World Time -

New Delhi: Empowered Committee on value added tax would meet on Saturday to take up the issues arising after three months of implementation of the new tax system by 21 states, including compensation formula for any losses incurred by states due to Valued Added Taxes (VAT).

"We will meet on July 9 to discuss implementation issues relating to VAT," Empowered Committee member secretary Ramesh Chandra.

To a query on reported inability by states to comply with the directive of VAT panel to provide commodity-wise revenue collection data to calculate the compensation package, Ramesh Chandra said no state has told him so.

Though it may be difficult to provide commodity-wise revenue collection data, it is always possible to have classification-based data, he added.

"There may be a number of commodities, say in grocery and to provide for revenue data for each commodity may be difficult task. But such data for grocery can be provided," the VAT panel secretary said.

Besides compensation formula, impact of new tax system on prices and ways to make VAT more consumer-friendly would also be discussed, In short, implementation issues will be the agenda of the meeting, he added.

Sources said shift of bullion trade from Delhi to two non-vat states, Rajasthan and Gujarat, is most likely to come up at the meeting.

Though the issue is not in agenda, the panel will take it up if Delhi raises the matter, Ramesh Chandra said.

The Delhi Government is, in fact, mulling to reduce VAT rate in bullion from 1 per cent since Rajasthan and Gujarat are levying sales tax of 0.25 per cent on it.

Delhi Finance Minister A K Walia said Delhi Government has taken up the matter with chairman of the Empowered Committee on VAT, Asim Dasgupta, and even discussed the issue with Union Finance Minister P Chidambaram.

"We have conveyed our concerns to the VAT committee chairman and the Finance Minister about bullion trade shifting from the capital to the non-VAT states," he said.

Walia said Delhi would take up the issue at the meeting of the Empowered Committee." The committee should check any discrepancies that take place due to the implementation of VAT. We will urge it to take some concrete decision in the matter," he said.

If a solution is not found at the meeting of committee, Delhi Government would be forced to reduce the tax on gold on its own.

The last meeting of VAT panel also gave a relief to Delhi to lower VAT on diesel from 20 per cent to 12.5 percent after Haryana, Punjab and Himachal Pradesh refused to raise VAT on the fuel to 20 per cent.

The meeting will also decide on persuading 8 reluctant states to switch over to VAT regime.

Asim Dasgupta, who had met Uttar Pradesh Chief Minister Mulayam Singh Yadav, Tamil Nadu Chief Minister J Jayalalithaa and Rajasthan Chief Minister Vasudhara Raje Scindia at the NDC meeting last month, said the panel needs to have more interaction with these states to persuade them to switch over to VAT.

" I will be in more comfortable position to tell you about these states after the Empowered Committee's meeting," he said.