New Delhi: The government yesterday issued a white paper on the coming value-added tax (VAT) regime. The white paper sets out the ground rules for the introduction of the new tax from April 1.

The VAT, which will replace plethora of sales and allied taxes in various states, will cover around 550 goods, of which a large number of commodities will fall in the 12.5 per cent tax rate.

Another 270 items will attract 4 per cent duty, and tax of 1 per cent will have to be paid on gold and silver ornaments. It has also been decided to exempt 46 products from the new tax, with 10 items to be decided by individual states and the rest being common across the country.

Traders with a turnover of less than Rs5 lakh will be outside the purview of the VAT. The white paper, however, raises the upper annual turnover limit for being classified as a small dealer from Rs40 lakh to Rs50 lakh.

These dealers will have the option to opt for a 'composition scheme' whereby they will pay VAT on a small percentage of their gross turnover. But they will be unable to claim input tax credit.

Further, units located in export oriented units (EOUs) and special economic zones (SEZs) will be granted either exemption from payment of input tax or a refund of the input tax paid within three months.

According to the paper, the VAT on imports, service tax and items under additional excise duty will also be integrated into the VAT system from the second year if decisions are taken expeditiously at the national level.

Despite the April 1 deadline, Uttar Pradesh's agriculture minister, Ashok Bajpai, said Lucknow would not impose the VAT on its traders unless some of the ground-level issues raised by them were sorted out. All other states have decided to go ahead with the new tax.

West Bengal's finance minister, Asim Dasgupta, chairman of the empowered committee on VAT, said he along with finance minister P Chidambaram would visit Uttar Pradesh and meet chief minister Mulayam Singh Yadav to sort out the remaining issues after January 26.