Tax administration at the state level is likely to get a major facelift soon with a common value added tax (VAT) form, procedures and tariff codes. After dithering for some time, states have finally yielded to the Centres proposal to bring about uniformity and standardisation in the VAT structure.

The national level VAT harmonisation is expected to bring relief to India Inc, especially major companies with businesses across states. Indian industry has been complaining for years about high transaction costs and lack of uniformity in state-level taxes.

The Centre is also working on an e-governance framework for VAT administration which will facilitate e-filing and online payments. The empowered committee of state finance ministers has set up a committee of officials to work out the pros and cons of a common VAT form and audit procedures, a finance ministry official told ET.

While there is a certain level of uniformity in VAT rates, there is no commonality in forms, tariff codes and audit procedures. The work on a harmonised system of nomenclature for state VAT, prepared by Central Board of Excise and Customs officials is complete and is likely to be adopted in the next fiscal, the official said. He said discussions on audit procedures and forms have begun and are expected to be finalised by mid-next year.

This is a welcome move. There was a certain level of uniformity in rates. The issue of uniformity in the area of forms and audit procedures will be addressed now. Much of the benefit of a common VAT is lost as a company has to file different forms in each state that it operates in, PricewaterhouseCoopers executive director S Madhavan said.

With the work on uniform tariff codes, forms and procedures moving forward, the Centre is working on an e-governance framework. The project aims at introducing e-payment and an e-filing system for VAT on the lines of Central Sales Tax. States would be able to get funding for modernising their VAT administration. The project would be implemented with help from the National Institute for Smart Government, a Nasscom and government initiative.

Uniformity and computerisation would help in tracking and checking evasion. The move would also smoothen the transition to a single goods and service tax from 2010. The Centre is expected to launch formal consultations on a national GST next month when the empowered committee meets.