India delays national sales tax

Traders have opposed the introduction of the tax

India has delayed the full introduction of a uniform national sales tax until the end of the year.

At a meeting of state finance ministers on Tuesday, 16 agreed on the June deadline, while the other 13 plan to have the tax in place by the end of the year.

"The majority of states decided to implement VAT from 1 June 2003," said Asim Dasgupta, chairman of a panel of state finance ministers.

"There are some problems for states going for elections later this year," he said.

There have been large protests by shopkeepers opposing the 12.5% sales, or value added tax (VAT), who form powerful lobbies in many states.

Trading tax

States have also been reluctant to give up their ability to set taxes on goods and services.

The 16 states implementing the tax first account for 75% of India's trade and industry.

The tax is designed to make accounting in India more transparent, reduce trade barriers and boost government tax revenues.

The tax, which was due to be implemented by 1 April, had already been delayed twice.

The states of Maharashtra, Gujarat, West Bengal, Madhya Pradesh, Karnataka, Andhra Pradesh, Tamil Nadu, Kerala, Haryana, Assam, Orissa, Bihar, Jharkhand, Tripura, Goa and Meghalaya will meet the 1 June deadline.