FINANCE MINISTER (SHRI P. CHIDAMBARAM)
(a) to (h): A statement is placed on the Table of the House.
STATEMENT IN RESPECT OF LOK SABHA STARRED QUESTION NO. 95 DATED
29.7.2005 TABLED BY SHRI CHANDRA MANI TRIPATHI AND SHRI LAKSHMAN
SINGH REGARDING VAT
(a) to (h): So far, 23 States/ UTs have implemented VAT. The general
feedback from the VAT implementing States/ UTs is that the new system
has been received well by the business community as well as the public.
There were some initial problems at the time of introduction of VAT,
which have been resolved by and large by the States through constant
interaction with the stake-holders.
Although it is too early to make a precise assessment of the impact
of VAT on revenues of the States/ UTs, it is seen from the provisional
figures of tax collection during the first quarter of current financial
year received from the States/ UTs that the overall trend of revenue
collections is positive and encouraging.
Regarding the impact of VAT implementation on inflation, the same is
difficult to assess, since inflation depends on a number of factors.
However, the overall rate of inflation, reflected through the
point-to-point movement in the Wholesale Price Index, has declined
from 5.7% for the week ending 02 April 2005 to 4.14% for the week
ending 09 July 2005. Moreover, the Empowered Committee of State
Finance Ministers has advised the States to constantly monitor
the price movement of goods after introduction of VAT.
Regarding claims for compensation for revenue loss due to
implementation of VAT, no time limit has been fixed for
submission of such claims. So far, compensation claims have been
received from 3 States, namely, Bihar, Maharashtra and Tripura.
