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From today, VAT
will bite less
TIMES NEWS NETWORK
New Delhi: Hoping to take the sting out of the anti-VAT sentiment and
contain public reaction to price rise, the Delhi government has slashed
tax rates on essential drugs, vaccines, artificial limbs, silk fabric,
khadi garments and hosiery items, all of which will become cheaper. The
Delhi cabinet approved the new rates, which will come into effect on Thursday.
The government also plans to make cooking gas (LPG) and sweets cheaper
by reducing levies on them.
Due to VAT, diesel and LPG prices have also gone up. The government has
now found that this has reduced the sale of diesel 40%-50%.
In view of this, the government plans to present its case before the empowered
committee of state finance ministers on Friday and seek permission to
keep the rate comparable to neighboring Punjab and Haryana.
WALK EASY
21 items exempted: List includes life-saving devices, drugs, vaccines,
syringes, walking aids, exercise books, silk fabric, and vegetable and
grass seeds
Rollback on LPG, diesel, sweets soon
Only 4% VAT on 159 industrial inputs
CM springs rollback surprise, stings Oppn
Prices Of 190 Items Including Life-Saving Drugs, Vaccines To Be Reverted
To Pre-VAT Days
TIMES NEWS NETWORK
New Delhi: After 13 days of implementation of value added tax (VAT) in
the city, politics has triumphed with chief minister Sheila Dikshit announcing
that the prices of life-saving drugs, vaccines, wheelchairs, silk fabric,
kirana items and school exercise books would be rolled back.
The prices of diesel and LPG are also expected to revert to pre-VAT days.
This means that the Rs 1.80 a litre increase in diesel price and a Rs
6 hike in the rates of LPG cylinders will be withdrawn. The government
is planning to reduce levies on diesel and LPG. In all, the price rise
of 190 goods will be rolled back.
On the political side, the BJP has not been very effective in raising
the VAT issue. The protests including closure of retail markets have
been trader-driven. But by rolling back prices, the chief minister may
take some of the sting out of the anti-VAT sentiment while reducing the
BJPs and her in-house critics capacity to score political points.
Revised taxation rates will come into effect from Thursday. About 21 items
have been exempted from VAT. The new exemption list includes drugs, vaccines,
wheelchairs, khadi garments, silk fabric, lac, exercise books for students,
syringes, artificial limbs, Braille watches, walking aids and seeds of
grass and vegetables.
About 159 items used as industrial inputs will become cheaper as they
will be taxed at 4%. Delhi chief minister Sheila Dikshit said: We had
mentioned earlier that we will review the situation after implementation
of VAT. We have found some problems. This is why we have decided to lower
taxation rates and exempt life-saving drugs and devices.
Your LPG cylinder might just get cheaper. Delhi government is planning
to roll back increase in tax rate on LPG, diesel and sweets. The government
will put this before the empowered committee of state finance ministers
on Friday. Delhi wants to bring tax on diesel back to 12.5% from 20% under
VAT.
Dikshit said: According to our estimates, the sale of diesel has dropped
about 40 to 50% in the last 13 days. We will take this up with the committee
and tell them that Delhi should not suffer because of unfair competition.
We should be allowed to lower our rates to make them comparable with our
neighbours.
Dikshit said she had spoken to chief ministers of Punjab and Haryana but
they were unwilling to increase their rates. She said: They have said
clearly that they cannot increase diesel cost because of farmers in their
states.
The government will also put forward the problem of schedules under VAT.
Before the implementation of VAT, Delhi Sales Tax Act had four rate Schedules
at the percentages of 1, 4, 8 and 12. If an item was not specified under
any Schedule, it was automatically taxed at 8%. Under VAT, the Schedules
are 0, 1, 4, 12.5, 20%. If an item does not find a mention in any schedule,
it is taxed at 12.5%. Delhi finance minister A K Walia said: We have
to ask the committee to allow us to tax unspecified items at 8% and not
12.5%.
The government is facing teething problems in implementation. Certain
cases of artificial inflation have also been reported. Dikshit said: We
have discovered unfair price increase. In one case, a vegetable vendor
blamed the price increase on VAT. This is why we need to educate people
about VAT. Delhi government will initiate awareness campaigns for the
consumers at various market places.
Garments
Silk sarees
Readymade khadi garments
Bags
Educational items
Charts
Instrument boxes
Globes
Educational charts
Household
Alluminium utensils
Kitchenware
Kirana items including dry fruits
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