4% VAT on used cars

Panel revises list of 550 goods

The sale of second-hand cars after April 1 will attract 4 per cent value-added tax (VAT). High-value items like platinum jewellery will attract a VAT of 1 per cent, while imitation jewellery will come within either the 4 per cent or the 12.5 per cent bracket.

Similarly, items such as hospital instruments, ECG instruments, petrochemicals, and other industrial inputs will attract 12.5 per cent VAT.

In case of railway catering, the tax liability will arise at the station of origin of the train, officials told Business Standard.

Officials said these decisions were taken at a recent meeting of the empowered committee of the state finance ministers. Accordingly, a list of 550 items to be covered under VAT has been expanded.

"It was recognised that the sale of old cars was an activity, which should be brought under VAT but it was felt that it would be unfair to tax it at 12.5 per cent. It has now been decided to charge it at 4 per cent after giving full input tax credits," an official said.

Other new items under VAT include transformers, coal, hides, skins and oil seeds to be taxed 4 per cent. Bread of all types draw zero per cent but pizza bread will be taxed at 4 per cent, while writing boards will attract 12.5 per cent.

Products like meat, fish and prawns that are not cured or frozen will be taxed at zero per cent but those processed or sold in sealed and air-tight containers will attract 12.5 per cent.

The entry on industrial inputs will include high-voltage cables, PVC or insulated wires and cables, jelly filled-cables and optical fibre cables.

Other items which will be taxed at 4 per cent include acids, aluminium and its alloys and products (except extrusions), polyster and staple fibre yarn, bagasse, basic chromium sulphate, sodium bichromate, biomas briquettes, castor oil, caustic soda, caustic potash, soda ash, dyes, acid dyes, basic dyes, rubber, raw rubber, latex, maize starch, glucose-D and paraffin wax.

Officials said 14 states had agreed to join the pilot project for the national tax information exchange system (TINXSYS) being developed by ICICI Infotech.

The project is likely to be commissioned by the end of April. The Centre has sanctioned Rs 3 crore for national-level publicity campaign and also has allocated funds for the installation of TINXSYS.

The new order

Second-hand cars will attract 4 per cent

High-value items like platinum jewellery will attract one per cent,

Imitation jewellery will come in either the 4 per cent or the 12.5 per cent VAT category

Items like hospital instruments, petrochemicals, and other industrial inputs will attract 12.5 per cent

Transformers, coal, hides, skins and oil seeds to be taxed 4 per cent

Pizza will be taxed at 4 per cent, while writing boards will attract 12.5 per cent

Meat, fish and prawns that are processed or sold in sealed and air-tight containers will attract 12.5 per cent

Railway catering will be taxed at 12.5% at the station of origin of the train