Central sales tax rate may be halved

Finance Minister P Chidambaram may signal the Centre's commitment to an early introduction of the value-added tax (VAT) at the meeting with state finance ministers.

He is expected to announce a possible halving of the central sales tax rate to 2 per cent in the forthcoming Budget and a legislation to decide the services that should be taxed by the states.

The schedule for implementation of the VAT has been repeatedly postponed since 2001 due to a lack of consensus among the states and with the Centre.

Chidambaram is expected to flag off the meeting by announcing a possible roadmap to be adopted by the Centre for the introduction of VAT by April, 2005.