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VAT comes into effect

VALUE ADDED Tax (VAT) regime finally come into effect from today in Madhya Pradesh along with other Bharatiya Janata Party (BJP)-ruled states of Chhattisgarh and Rajasthan.

india Updated: Apr 02, 2006 14:51 IST

VALUE ADDED Tax (VAT) regime finally come into effect from today in Madhya Pradesh along with other Bharatiya Janata Party (BJP)-ruled states of Chhattisgarh and Rajasthan.

Although the Madhya Pradesh Assembly had enacted the VAT Act in 2002, it had been kept in abeyance. The Act was amended without debate on the last day of the Assembly’s budget session last month and notified for implementation from today.
Cloth, sugar and tobacco, which were not covered under Commercial Taxes Act earlier, have been exempted from VAT purview, said Commercial Taxes Commissioner P K Das.

The commodities that figured on Schedule-1 of the Act under Central Government’s Additional Duties of Excise (Goods of special importance) Act, 1957 have been exempted from excise duty.

In Indore, in order to provide information to traders on VAT, the Commercial Tax Department has opened a divisional-level VAT Helpline which will provide all information regarding the VAT.

The five BJP-ruled States today embraced Value-Added Tax, replacing the sales tax system as was done by 22 other Indian states last year. There were, however, two other states - Tamil Nadu and Uttar Pradesh - that are still holding out against VAT.

Small businesses with a turnover of up to Rs five lakh are exempt from the new tax, which has two main slabs of four per cent and 12.5 per cent. The State’s industry sector has welcomed VAT.

The five BJP-ruled states, along with Tamil Nadu and Uttar Pradesh had earlier refused to implement the new tax citing protests by traders and absence of a clear cut roadmap for abolition of central sales tax.

CST was earlier scheduled to be reduced to two per cent from this fiscal against the present four per cent and eventually phased out by fiscal 2007-08.

However, the empowered committee on VAT had to set up a working group on phasing out of CST due to lack of consensus between states and the Centre.

First Published: Apr 02, 2006 14:51 IST