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VAT panel promises even rates

New Delhi, April 16: Asim Dasgupta, chairman of the empowered committee on value-added tax (VAT), today said states will be granted powers to levy different rates on a few select products but the committee will ensure uniformity in tax rates of most items.

The VAT panel, which met here today, decided to sit together again on April 25 and 26 to resolve anomalies in taxes levied by different states.

Dasgupta told reporters here today that he would work to reduce prices in places where it has gone up. He also said he would visit the eight states ' Uttar Pradesh, Tamil Nadu, Uttaranchal, Rajasthan, Gujarat, Madhya Pradesh, Jharkhand and Chhattisgarh ' to try persuade them to join the VAT regime.

'Twenty-one states introduced VAT and they remain firm in the implementation process. There are about eight states that have not switched to VAT but may be in the final stages. We will visit all these states and request them to join us,' Dasgupta said.

Admitting teething problems, he said, 'Over 130 countries have introduced VAT and the initial teething problems were more intense there... We are confident in resolving the issue in the interest of the consumers.'

Anomalies in VAT rates and the increase in prices are expected to be resolved at the meeting called on April 25.

'We have received complaints of variations in VAT rates across states... We want to come to a convergence among ourselves. When a new tax system is introduced, there is bound to be variations. But it can be settled,' he said, adding 'We will strike a balance between uniformity and flexibility in VAT rates."

The empowered committee in its next meeting will also resolve the differences between states on the issue of minimum floor tax rate on diesel and other petroleum products.

Some states have imposed tax rate on diesel at lower rate instead of the floor rate of 20 per cent envisaged by the empowered committee earlier.

However, Dasgupta said that petroleum products will be out of VAT since their prices are not totally market determined.

'Petroleum products are still out of VAT. There will be no deviation. The reason why they have been kept out of VAT is that they fall under administered price mechanism," he said.

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