The Hindu : National : Most rural traders will not attract VAT: Chidambaram

Online edition of India's National Newspaper
Tuesday, Dec 21, 2004

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National

Most rural traders will not attract VAT: Chidambaram

By Our Special Correspondent

NEW DELHI, DEC. 20. Though a political and economic consensus has emerged over the proposed Value-Added Tax (VAT) from April 1, 2005, some sections of the trading community have expressed reservations, the Union Finance Minister, P. Chidambaram, said here today. He, however, explained that most of the traders, mainly from the rural areas, would not fall under the ambit of VAT as the threshold limit of turnover was Rs. 5 lakhs and traders with turnover up to Rs. 40 lakhs would have the facility of compounding, which would minimise the need for detailed account keeping.

At a meeting of members of Parliament attached to the consultative committee of his Ministry, he said that very good progress had been made for the introduction of the new taxation system and all States would be ready to adopt it from April next. Twenty-seven States had already got legislation ready and the remaining were expected to do so by next month.

Multimedia campaign

About the apprehensions of the trading community, the Minister said he was ready to deal with their genuine difficulties and would soon hold a series of meetings in different parts of the country to allay their apprehensions. Stressing on the need to educate the people on different aspects of VAT, he said a multimedia campaign, including in regional languages, would soon be launched to inform and educate the public and the trading community. A white paper on VAT was also ready and a standing committee, which includes representatives of traders, was looking into different aspects.

The Finance Minister said the rapid adoption of VAT by countries around the world was probably the most important tax development of the 20th century. VAT today was a key source of government revenue in over 125 countries and when it had proved beneficial and good for these countries, it could not be bad for India, he added.

He said the Government had deferred the decision on the abolition of Central Sales Tax by one year.

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