Firm on meeting the June deadline for introducing value-added tax in at least 16 states, the empowered committee will meet Finance Minister Jaswant Singh next week to iron out differences and get the Centre's support.

Indications are that the majority of states might go ahead with VAT, along with the 4 per cent central sales tax or extend the deadline further till all of them adopt the uniform tax regime.

"Our date for implementation of VAT remains very firm, that is June 1, 2003. We intend to meet finance minister in first week of May after which a final decision will be taken," the committee chairman Asim Dasgupta said after the two-day meeting in New Delhi.

"We need the support of government on two areas -- financial support in case of loss of revenue in the initial years and phasing out of CST, and expeditious clearance on the states' VAT Bills," he said, referring to the forthcoming meeting with Singh.

Although the 16 states agreed to switch over to VAT from June, Singh said in Parliament that it cannot be implemented "without full preparation being made by states."

However, Dasgupta claims that the preparations would be finalised by May first week for VAT to be put in place in 16 states covering 75 per cent of trade and industry.

"We (states) have ironed out some of the wrinkles so that the common features are shared and the special problems sorted out. Several states have expressed to join us soon after 16 states implement VAT," the West Bengal finance minister said.

Singh, on the other hand, discouraged a 'patchwork or partial implementation' of VAT and made it clear that reduction in CST from 4.0 to 2.0 per cent is 'contingent' upon VAT introduction.

He said there would be no departure from the agreed list of commodities that were to be subject to 12.5 per cent rate of VAT and all state legislations must conform to the model VAT legislation circulated to them earlier.

Dasgupta said the VAT panel has made a lot of progress on classification of items for different tax rates along with other refinements.

"The 16 states are making best efforts to introduce VAT beginning June 2003," he said, but declined to give details of rate of tax on various items.

He pressed on the financial package that was promised by the Centre that envisages 100 per cent compensation in the first year, 75 per cent in second year and 50 per cent in the third year if there is revenue loss while implementing VAT.

Another panel member said if VAT is not implemented from June, it might be delayed by over six months.

The urgency of states for implementing VAT comes in the light of their deteriorating financial conditions and mounting fiscal deficit to about 4.0 per cent of GDP.

VAT, which would replace CST, would bring down the tax rate on at least 425 items, reduce the general price level and do away with tax evasion.