VALUE-ADDED TAXATION IN THE STATES - CHALLENGES AHEAD

The need for co-ordinated development of domestic trade taxes in the I ndian federal polity has shifted the focus to reforms in the states' s ales tar systems. Detailed deliberation has led to a consensus on the need to transform the prevailing sales taxes into a destination based consumption type value added tar. Attempts to reform sales taxes, howe ver, have not been always in the right direction and, in addition, hav e met with resistance from traders. Based on the experience gained so far. this paper attempts to set out the strategy and stages of reform towards evolving the value added tar which is less distortionary and m ore acceptable to traders.