The Hindu : National : VAT: decision on number of services put off

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Sunday, Apr 15, 2007
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National

National

VAT: decision on number of services put off

Special Correspondent

NEW DELHI: The Empowered Committee of State Finance Ministers on Saturday deferred till next month a decision on the number of services to be brought under the VAT net from this fiscal.

Earlier it was agreed to empower the States to impose the Value Added Tax on 44 services including legal, education and health services as also performances by film artists. Briefing newspersons after the meeting here of the VAT panel, its chairman and West Bengal Finance Minister Asim Dasgupta said the new levy on the 44 services would be part of the compensation package to help the States bridge revenue loss on account of the cut in Central Sales Tax (CST) from four to three per cent this fiscal.

Tax collection

Dr. Dasgupta noted that while the tax on these services would be imposed by the States this fiscal, it would be left to the Centre to collect the service tax on their behalf in the first year. For, the States did not have the administrative machinery as yet to collect the tax on their own.

During the discussions, some States were reluctant to impose a tax on certain services such as education for fear of a public backlash. It was because of these differences that a final decision was deferred.

The CST, levied on inter-State sale of goods, was reduced with the objective of gradually eliminating it by 2010-2011, by when a uniform Goods and Services Tax is to be imposed throughout the country.

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