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Delhi and Maharashtra may lower value added tax on bullion to 0.25 per cent as consensus on introducing uniform floor rate for precious metals seemed difficult to emerge at the empowered committee's meeting on Wednesday, Delhi Finance Minister A K Walia said on Tuesday.
"We will first try to evolve consensus on the issue, but if that does not happen, we will be forced to lower VAT rate on bullion," Maharashtra sales tax commissioner B C Khatua said after coming out of the first day of empowered committee's meeting.
The meeting, attended by empowered committee chairman Asim Dasgupta and secretary Ramesh Chandra, was basically an interaction of state sales tax commissioners prior to detailed discussions with finance ministers.
Bullion trade is shifting from Delhi and Maharashtra to Rajasthan and Gujarat because of difference in tax on the precious metals.
While Delhi and Maharashtra have one per cent VAT rate on bullion, Rajasthan and Gujarat levy 0.25 per cent sales tax on precious metals.
Delhi will lose Rs 40-50 crore (Rs 400-500 million) because of the shift, revealed Delhi sales tax commissioner R K Verma.
Maharashtra is set to lose Rs 40 crore (Rs 400 billion), Khatua said.
Now even Uttar Pradesh has announced lowering of sales tax rate on bullion, Walia added.