The Bharatiya Janata Party (BJP) Tuesday said it will adopt the Value-Added Tax (VAT) system in the five states where it is in power from April 1 next year.

"All the BJP-ruled states have agreed in principle to implement the VAT by April 1 next year," senior BJP leader Mukhtar Abbas Naqvi told.

"There are some reservations on some aspects of the VAT, but we are confident these issues will be sorted out," he added.

The party also took an exhaustive review of the way the VAT has been implemented by the states and union territories in the past eight months at a conference of chief ministers of the BJP-ruled states - Madhya Pradesh, Rajasthan, Jharkhand, Chhattisgarh and Gujarat.

The conference, chaired by party president L.K. Advani, decided "in principle" that these states will adopt the system, but stressed on establishing the tax information network and educate not only officials but also the trading community and the public about its various facets.

The party also discussed issues like revenue loss resulting from implementing VAT and the modalities of phasing out the central sales tax (CST) and decided that Chhattisgarh chief minister Raman Singh will take up the issue on December 16 with the empowerment committee of the government, headed by Asim Dasgupta.

The finance ministers of BJP-state governments will meet prior to that meeting and formulate their combined position.

"The flexibility permitted in the system will be used to address the concerns of the trading community," a statement issued by the party said.

The party expressed its anxiety about the loss of revenues from the phased abolition of the CST and recommended that the states implementing the VAT regime should be compensated to the extent of 100 percent in the first year of its adoption.


The VAT, one of the country's most ambitious tax reforms, was introduced in 20 of the 29 states on April 1 after being delayed many times.

Besides the five BJP-ruled states, the other four states/union territories that are yet to implement VAT are Uttar Pradesh, Tamil Nadu, Pondicherry and Chandigarh.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has appealed to all political parties to adopt VAT latest by Jan 1, 2006 as it would inject close to $20 billion into the economy.