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Central Sales Tax Act to be amended: Sinha

The government will amend the Central Sales Tax Act to move on to Value Added Tax system in the entire country from April 2002 and introduce Permanent Account Number as common business identifier for VAT to check tax evasion, Union Finance Minister Yashwant Sinha said on Thursday.

"The necessary amendments to Central Sales Tax Act are ready and hopefully they will be tabled in the monsoon session of Parliament," Sinha said.

Amendments to the outdated 1899 Indian Stamp Act would also be carried out, he added.

After consulting all the states, a new Indian Stamp Act has been drafted laying emphasis on rationalisation of stamp duty rates and simplification of procedures, he said opening the conference of chief ministers and state finance ministers on the implementation of VAT and sales tax reforms.

The empowered committee of state finance ministers on VAT and other issues headed by West Bengal Finance Minister Ashim Dasgupta also presented its report at the conference.

Expressing happiness that there was a consensus among states for using PAN as the 'common business identifier', Sinha said that this move will help the Centre and the states tackle problems on the revenue front, particularly those of leakages and evasion.

He described the help received from states for the introduction of uniform sales tax and movement towards VAT as an 'outstanding example of co'operative federalism'.

He, however, regretted that a few states and union territories have not yet fully implemented the uniform floor rates of sales tax.

Sinha said 100 per cent compliance on uniform floor rates of sales tax by states was important for the system to work and it was in this context that those who have not fully implemented should come forward to do so immediately.

According to the empowered committee report, uniform floor rates have not been compiled on 84 major items in Pondicherry and 14 items in Gujarat.

The committee has suggested that states which do not implement 100 per cent uniform floor rates by July-end should be penalised by discontinuing central assistance.

Listing the deviation by states on uniform floor rates, the report said Tamil Nadu has made deviations in case of 13 items.

Goa, Rajasthan, Karnataka, Haryana, Himachal Pradesh, Delhi, Chandigarh, Andhra Pradesh, Tripura, Mizoram, Orissa and Gujarat have deviated in one to four items.

The report also highlighted some of the incentives given by states. A refinery to be started in Allahabad has been given sales tax exemption by Uttar Pradesh government, while Punjab proposed to give similar exemption to a refinery in Bhatinda.

Bio-technology park in Andhra Pradesh from sales tax, while Karnataka gives sales tax incentives to sick units.

Some states have not levied sales tax on country liquor due to auction system. Assam has merged it with excise. Goa continues to give incentives to all categories of industries, the report said.

States demand central aid to switch to VAT system

Several state governments on Thursday expressed their commitment to introduce value added tax, but demanded central assistance for upgradation of their tax collecting agencies along with certain modifications in the proposal.

"The state is in favour of the introduction of VAT, but the Centre should exempt agricultural inputs and allied activities from its ambit," Haryana Chief Minister O P Chautala, said.

Speaking at the 'Chief Ministers' and Finance Ministers' Conference on Value Added Tax and other issues', he also asked for central assistance for modernisation of tax collecting agencies in the states.

Punjab expressed its keenness to adopt the system, but its Finance Minister Kanwaljit Singh pointed out that its current tax structure already incorporated some of the VAT features within the overall framework of retail tax.

He said to begin with there should be multiple instead of a single rate for VAT because the latter might be so high that it would not be acceptable wither politically or to the trade and industry.

Meghalaya Chief Minister E K Mawlong wanted the Centre to compensate states for the loss of revenue due to the introduction of the mechanism.

He also asked for financial support from the Centre to computerise its tax collection network for implementing the concept on time.

Kerala Finance Minister K Sankaranarayanan too showed state's commitment towards VAT but felt preparatory action had not been taken by the Centre.

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