The VAT panel has urged the Uttar Pradesh Government to join the National Tax Information Exchange System (TINXSYS), which has been put in place to facilitate information exchange between the sales tax departments across the country and establish a database for all inter-State transactions.

"We have requested the Uttar Pradesh Minister who attended today's meeting to join the TINXSYS as early as possible. It has been conveyed that their decision on joining TINXSYS has nothing to do with VAT. This is independent of VAT. If they join, it would be good for Uttar Pradesh and also the other States," Dr Asim Dasgupta, Chairman of the Empowered Committee of State Finance Ministers on VAT, told Business Line.

Uttar Pradesh is one among the few States that have not so far implemented the State-level value added tax (VAT) system. Dr Dasgupta said that 28 States have joined the TINXSYS, with 14 of them already conforming to the set milestones under the project.

The VAT Panel Chairman said that the progress towards availability of data has not been uniform. "While 14 States have fully complied, we expect the remaining to do so by August 31 this year. We are monitoring the situation," he said.

Besides facilitating information exchange between sales tax departments across the country, the TINXSYS also provides a platform for dealers to verify the validity of registration numbers of counter-party dealers.

Informed sources said that it was critical for States to join TINXSYS especially when the central sales tax is proposed to be phased out.