The Hindu : New Delhi News : Government reduces VAT rate on many items

Online edition of India's National Newspaper
Friday, Apr 01, 2005

New Delhi

New Delhi

Government reduces VAT rate on many items

By Our Staff Reporter

NEW DELHI, MARCH 31. Ruling out the possibility of postponement of the Value Added Tax (VAT) regime, Delhi's Finance Minister A.K. Walia yesterday announced that the new tax regime would be implemented from April 1. He also announced roll back on tax rates on a large number of items including toys, school bags, midday meals, kirana items -- including suji, maida, besan and atta -- even as the Delhi Assembly passed the Budget today in the absence of the Opposition who were expelled from the House for protesting against implementation of VAT.

Replying to the debate on the annual Budget, Dr. Walia ridiculed the Leader of the Opposition, Jagdish Mukhi, for not coming up with constructive suggestions and making baseless allegations just for the sake of criticism. Stating that the VAT regime was trader friendly and a less cumbersome system, Dr. Walia accused the BJP of spreading misinformation on the issue for political reasons. He was also harsh on the BJP Chief Whip, Sahib Singh Chauhan, for making "illogical presentation'' on the Budget and said the Government stood by the common man.

Stating that the Government was committed to protecting the interest of the common man, Dr. Walia said it had been decided to reduce the VAT rate on kirana items namely araroot, singhara, kuttu and kuttu ka atta, kala namak, sendha namak, heeng, aampapar, mushroom, gola, goley ka burada, seik narial, sesame, magaj, groundnut dana, sabudana, roli, henna patti, kesar from 12.5 per cent to 4 per cent. Similarly, atta, maida, besan and suji have been totally exempted from payment of tax. He said rope and cotton lining used by craftsman to make chairs, baskets and tables were also being exempted from tax.

Supporting the cause of the Municipal Corporation of Delhi, Dr. Walia exempted the midday meal scheme from tax, an issue that had threatened to become a major controversy. He also announced that that VAT on school bags with MRP up to Rs. 300 was being brought down from 12.5 per cent to 4 per cent. Plastic granules used for manufacture of plastic goods would also be taxed at 4 per cent instead of 12.5 per cent earlier. The Department of Sales Tax would also issue clarification about items covered by entry "paper'' taxable at 4 per cent to avoid any disparity.

Dr. Walia said it would not be possible for them to accede to all the requests for rollback on taxes as the new law provided for uniform floor rates by all States. The anticipated reduction in tax on surgical items did not come through as Dr. Walia was of the opinion that such services were free in government hospitals for the poor and the rich could afford to pay more in private hospitals. He said diversion from the floor rates was not possible as these decisions had been taken at the meeting of the Empowered Committee but promised to look into the various problems faced by the traders and the business chambers under the new regime with an open mind.

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