New Delhi: After the introduction of VAT, prices of 26 commodities across the country have risen as these commodities are taxed under VAT at a much higher rate than they were in the old sales tax system.

The ''empowered committee on VAT'' is now seriously thinking of an intermediate rate of eight per cent so that there is no drastic increase in prices. "We are willing to be flexible on the issue of variation in tax rates. We have to give states adequate flexibility but within the federal set up," said Asim Dasgupta, chairman of the empowered committee.

Dasgupta has hinted that the committee may consider introducing more tax slabs especially as states like Uttar Pradesh say they might consider joining the VAT regime if the tax slabs are more graded.

"It is important that you have an intermediate rate of eight per cent otherwise by having just the four and the 12.5 per cent slabs, either prices shoot up if the commodity is taxed a 12.5 per cent or otherwise government loses revenue if its taxed at a lower rate of four per cent," said Ashok Vajpayee, minister for agriculture, UP.