Uttar Pradesh to implement VAT from new year

Uttar Pradesh will shift to the much awaited value added tax (VAT) regime from Jan 1, it was announced Thursday.

The state government issued an order to this effect, following the president's formal assent to the related bill Wednesday.

Financial experts were of the view that the delay in the switch to VAT would cause substantial losses to the state.

The state would not be able to claim any reimbursement from the central government towards revenue losses suffered during the first year of the VAT implementation.

As per the Empowered Committee's recommendation, all states that switched over to the VAT regime by 2005 were entitled to total reimbursement of initial losses by the central government in the first year of implementation, 75 percent in the second year and 50 percent in the third year.

According to a top official of the state's institutional finance department, 'Uttar Pradesh's initial loss on account of the switchover was likely to touch Rs.3,000 crores (Rs.30 billion).'

Source : India Business News - http://www.indiaprwire.com/, dated 20/12/2007