‘VAT had no impact on consumer prices’
According to Finance Minister Mr Chidambaram one could not draw any definite conclusion on the effects of VAT based on just first quarter results.
The introduction of Value Added Tax (VAT) system in states replacing sales tax has made no adverse impact on consumer prices and revenue earnings under the new tax regime have shot up by 15.3 per cent during first quarter of current fiscal, Finance Minister P Chidambaram said on Tuesday.
Studies conducted by trade bodies have shown that introduction of VAT has no adverse effect on prices in the country and both Wholesale Price Index (WPI) and Consumer Price Index (CPI) have come down to under four per cent, he said while replying to supplementaries during Question Hour in the Rajya Sabha. He said while WPI at 3.84 per cent is the lowest in two years, the CPI has been veering around 3 to 3.5 per cent.
Mr Chidambaram said the rate of increase or decrease in tax revenues after introduction of VAT depended on corresponding sales tax rate that prevailed before introduction of the new tax regime. The Finance Minister said no definite conclusion could be reached about effects of VAT based on the first quarter results.
More: deccanherald.com