New Delhi: After the introduction of VAT, prices of 26 commodities
across the country have risen as these commodities are taxed under VAT at
a much higher rate than they were in the old sales tax system. The
''empowered committee on VAT'' is now seriously thinking of an intermediate
rate of eight per cent so that there is no drastic increase in prices. "We
are willing to be flexible on the issue of variation in tax rates. We have
to give states adequate flexibility but within the federal set up," said
Asim Dasgupta, chairman of the empowered committee. Dasgupta
has hinted that the committee may consider introducing more tax slabs especially
as states like Uttar Pradesh say they might consider joining the VAT regime
if the tax slabs are more graded. "It
is important that you have an intermediate rate of eight per cent otherwise
by having just the four and the 12.5 per cent slabs, either prices shoot up
if the commodity is taxed a 12.5 per cent or otherwise
government loses revenue if its taxed at a lower rate of four per cent,"
said Ashok Vajpayee, minister for agriculture, UP.
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