kolkata the centres plan to request state governments to enhance the entry level rate of valueadded tax vat from 4 to 5 has given the jitters to a section of exporters who missed out on vat refunds from several state governments the centre however plans to compensate states in view of the forthcoming reduction in central sales tax cst rates from 3 to 2 which is scheduled to take place from 200809 though all states have agreed to refund vat payments to exporters on a quarterly basis there are reports that apart from andhra pradesh gujarat tamil nadu punjab and maharasthra nonpayment of vat refunds to exporters remains an acute problem in most states especially in west bengal and orissa for instance west bengalbased exporters from engineering export promotion council eepc indian leather products association ilpa federation of indian export organisation eastern region and export promotion council of handicrafts eastern region allege that none of them got refunds against vat payment on exportbound goods and on their inputs ever since the tax was introduced in the state in april 2005 based on the turnover of exports that have been despatched from the state from april 2005 to november 2007 they claim engineering goods exporters from the state have deposited around rs 230240 crore each year toward vat payment but did not get a single rupee as refund against the payment of local tax the same problem is being faced by other exporters from the state it is estimated that leather goods exporters pay about rs 80 crore vat every year handicraft exporters rs 1618 crore and other exporters around rs 100 crore the hike in the minimum vat rate will hurt exporters in those states where vat refund remains unpaid since the tax was levied this will be an additional blow to them who like their peers all over the country are already knocked down by an appreciating rupee said eepc chairman rakesh shah he said an enhanced vat entry rate of 5 without a mandatory condition that vat refunds be paid on monthly or quarterly basis will block more working capital funds of those exporters if the centre wants to raise vat entry rate it should also make ask states to refund vat due to exporters otherwise the centre should reimburse the tax to exporters by withholding the central plan allocations of the erring states suggested eepc