Compensation to states under the value added tax regime during 2005-06, the first year of its implementation, stood at Rs 2,471 crore (Rs 24.71 billion) against a revised Budget estimate of Rs 2,500 crore (Rs 25 billion).

However, with claims for March yet to be submitted by several states and outstanding claims of states like Maharashtra for Rs 1,100 crore (Rs 11 billin) for the July-January 2005-06 period, the VAT compensation for the current fiscal is expected to be higher than the Budget estimate of Rs 3,000 crore (Rs 30 billion).

"The compensation during 2006-07 would be higher than Rs 3,000 crore since five states  - Chattisgarh, Jharkhand, Madhya Pradesh, Gujarat and Rajasthan - have joined VAT, taking the total number of states to 30.

The total compensation of the 25 states during April-March 2005-06 inclusive of claims pertaining to the period settled in 2006-07 is likely to touch Rs 4,500 crore (Rs 45 billion)," an official said.

Andhra Pradesh has submitted claims up to January while Bihar and Karnataka have submitted claims up to February.

Tripura has filed claims up to October 2005 while West Bengal has filed its compensation claim up to December 2005.

Officials said the finance ministry had three VAT compensation claims outstanding as on March 31, 2006. Of this, Kerala's claim for Rs 51 crore for December 2005 is unlikely to be processed further as the state's VAT collections for January-February had shown a huge increase, an official said.

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