VAT: Centre to compensate states
The Finance Minister, P Chidambaram, on Tuesday urged Uttar Pradesh and Gujarat to implement VAT and assured that any State suffering loss due to its imposition would be compensated by the Centre.
He said that though VAT is a State tax replacing the sales tax with the Centre acting just as a facilitator, the Union Government would compensate 100 per cent loss during first year, 75 per cent during second year and 50 per cent during the third year.
Trying to allay the apprehensions of people, he said that imposition of VAT has not resulted in more burden on consumers as indicated by the low rate of inflation since its imposition.
About the reluctance of Gujarat and Uttar Pradesh Chief Ministers to impose VAT, the Minister said that he was ready to meet them anywhere anytime to allay all their apprehensions regarding VAT, which he described as an “efficient revenue increasing and transparent system of tax collection".
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