VAT may be deferred by 8 months

Finance Minister Jaswant Singh would announce shortly in Parliament that the value-added tax (VAT) was to be held in abeyance for the next 6-8 months, BJP general secretary V K Malhotra has said.

A few days ago, the Bharatiya Janat Party had demanded that the implementation of VAT be deferred because the party did not want the country to be divided into VAT and non-VAT states.

The finance minister's announcement will be another rollback, coming on the heels of a rollback of fertiliser prices. Singh is likely to include a new calendar for VAT in his reply to the debate on the Budget for 2003-04 this week.

"Of 16 states, 10 have not even formulated their Bills. I think it will now take 6-8 months for its implementation," Malhotra said. "The finance minister will soon announce this in Parliament," he added.

Although Singh had announced in the Budget for 2003-04 that the new tax regime, replacing sales tax, would be in vogue from April 1, it had to be deferred twice in the wake of differences among the states and widespread protests from the trading community.

Accordingly, the empowered committee on VAT, headed by West Bengal Finance Minister Asim Dasgupta, had announced its implementation from June 1.

However, the BJP is reported to be in favour of deferring the implementation of VAT. Recently, a delegation of party leaders met Prime Minister Atal Bihari Vajpayee to discuss the issue.

"It (VAT) will not function if there is a division among the states. If Haryana implements it, and Punjab and Delhi do not, then it will not work," Malhotra said, adding that the states would have to be united to implement it.