All states in India have agreed to levy the same sales tax on goods, ending inter-state competition.

A 12.5% sales - or value added tax (VAT) - tax will be introduced on 1 April.

The states which already levy VAT also agreed to drop entry taxes on goods from other states which do not, once VAT has been introduced.

There has previously been inter-state rivalry, as states vie with each other to attract business.

Indian newspaper, the Business Standard, reported that a the Empowered Committee of States Finance Ministers agreed the measures on 8 February.

The tax was originally due to be introduced in April last year.

Tax reform

Some states like Assam and Rajasthan have been levying an entry tax on goods from states which had no sales tax to prevent unfair competition.

Kerala has an entry tax on items including electrical goods, edible and inedible oils and petroleum products.

Under India's indirect tax system, the central government has the authority to impose excise duties while the states have the power to levy sales tax.

States can also raise revenues through an entry tax on goods and services.