Asim: Focused

New Delhi, Aug. 17: The state governments have finalised the value-added tax (VAT) rates for 500 items. The VAT regime, which comes into effect from April next year, will keep the rate for essential commodities and manufacturing inputs at 4 per cent.

Asim Dasgupta, West Bengal finance minister and chairman of the empowered committee on VAT, said a formal list with the VAT rate will be announced shortly.

The committee met here today to sort out some of the glitches over the implementation of VAT.

A meeting is scheduled with finance minister P Chidambaram where the issue of compensating states for any revenue loss they might suffer as a result of implementing the VAT regime will come up for discussion.

There are about 41 items that will be exempted from VAT. These include petrol, diesel, aviation turbine fuel (ATF), agriculture equipment and newspapers.

Precious metals like gold and silver will attract only 1 per cent tax. Sugar, textile and tobacco items have been kept out of the VAT net.

States have agreed on the 4 per cent VAT for 250 items, including agro products and manufacturing units. A tax rate of 12.4 per cent has been fixed for 217 other items.

Dasgupta said the states were fully prepared for VAT from April 2005. He said the views of the states would soon be conveyed to the finance minister.

Each state government will have to enact separate VAT legislation. The state governments have rejected a proposal to implement a uniform law to make VAT effective.

As a result, India is likely to witness 28 pieces of legislation, one each by every state. The industry is concerned at the different laws, penal procedures and the nature of discretionary powers.

Several quarters in the industry, especially traders, have on several occasions expressed concerns about differences in laws and procedure of various state governments regarding the implementation of VAT.