Uttar Pradesh will soon join the rest of the country in replacing trade tax with value added tax (VAT), officials said on Saturday.
"We are in the process of working out modalities for implementation of VAT. Now it may only be a matter of time," state cabinet secretary Shashank Shekhar Singh told IANS.
Uttar Pradesh has so far not joined the VAT system due to pressure from powerful traders. However, with Mayawati as the new chief minister, things are about to change.
"VAT is a far more practical system and in any case when the entire country is following that pattern, there is no reason why anyone should oppose it," Singh said.
Official sources said the state cabinet would soon take a formal decision on the switchover.
Shekhar Agarwal, state principal finance secretary, said: "The implementation of VAT could make substantial difference to the overall revenue accruing from the existing trade tax.
"The VAT system is far more transparent and leaves very little scope for evasion as compared to trade tax. Therefore, its implementation is bound to net higher revenue."
Uttar Pradesh collects about Rs 170 billion in trade tax every year, which is nearly 60 per cent of the state's tax revenue receipts.