VAT redressal demanded

The finance ministry has received proposals from Bihar, Tripura and Maharashtra for compensation under the value-added tax regime.

While Tripura has sought Rs 5 crore and Bihar Rs 100 crore for the first quarter, Maharashtra has sought around Rs 340 crore for April-May alone.

Since the three states sent their proposals before the July 9 meeting of the empowered committee of state finance ministers on the VAT, the finance ministry has asked all the three states to send their revised proposals following the compensation performa approved by the committee at the last meeting.

Official sources told Business Standard that the compensation of Rs 5 crore demanded by Tripura for the period April-June was likely to be accepted as the finance ministry had compared the data provided by states with RBI statistics.

"The state government has been asked to send and obtain verification of the data by the Accountant-General," they said.

The finance ministry has questioned the data provided by Bihar as the state had recorded a good growth under the VAT. Officials said Bihar had made a request for compensation on the grounds that the growth rate under the VAT was lower than the average growth rate of around 40 per cent achieved during its three best years from 1999-2000 to 2004-05.

Similarly, Maharashtra had also been asked to send a fresh proposal since the state did not enclose any performa.

Officials said Maharashtra had also been asked to rework its numbers as it had included non-VAT items such as petrol and diesel which accounted for a large share of the revenue.