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New Delhi, Dec 14 (UNI) Lauding the Jammu and Kashmir Government for effective implementation of VAT regime, the Empowered Committee of Finance Ministers has asked other states of the country to follow it as a role model.

An official spokesman said Empowered Committee chairman and West Bengal Finance Minister Asim Dasgupta acknowledged the substantial progress made by the Jammu and Kashmir government in revenue collection through the implementation of VAT regime.

During his presentation at the meeting, Jammu and Kashmir Finance Minister Tariq Hameed Karra, who is a member of the high-powered Committee, highlighted some critical issues impeding augmentation of state revenues.

Mr Karra said the major area of concern was the delay by the Central Government in fulfilling its commitment with the States regarding the losses suffered with the switch-over to VAT regime.

''Even after two years of VAT implementation, the Centre is yet to phase out the Central Sales Tax (CST) and workout the compensation formula for the States, including Jammu and Kashmir,'' he added.

He said the Centre must announce a compensation package in the union budget to fulfill its commitment in this regard.

The second area of concern, Mr Karra said, was tax deviation by the neighbouring states on goods listed under VAT.

While the national average of such deviation is only three per cent, the deviations by the states neighbouring Jammu and Kashmir is a staggering 15 per cent, he pointed out.

''Such deviations by the neighbouring states cause a huge revenue loss to J&K and the Central Government must intervene to prevent the State from bearing this recurring loss,'' he added.

Mr Karra said the State's cumulative rate of growth in the revenue collection under VAT regime has gone up by 35 per cent and from Rs 455.74 crore ending November 2005, it has shot up to Rs 615.81 crore ending November 2006.

During the current year, the revenue collection has gone up from 66 per cent in April to 79 per cent in November, the Finance Minister said.

The registration of traders under VAT regime has gone up from 22,426 (pre-VAT) to 42,722 registering a growth of 94 per cent, the highest in the country, he said.

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