Delhi tyres face VAT chill

With the Haryana government still not notifying the 12.5 per cent value-added tax(VAT) on tyres, Delhi's tyre trade is being badly hit, with sales dipping almost 80 per cent in tyres for commercial vehicles and utility vehicles.

Summer being a peak season for the tyre trade, the state's tyre trade has lost around Rs 200 crore during the last two months, ever since the VAT came into effect from April 1.

The Haryana government, which after the invention of the empowered committee, had agreed to bring rates at par with the other states on May 4 thereby making tyres taxed at 12.5 per cent at par with Delhi, had not notified the new rates till now.

"We were hopeful that by mid-May, the VAT rate anomaly between Haryana and Delhi would be corrected," said S P Singh, convenor, All India Tyre Traders' Federation.

The rate difference had led to a situation where a large number of trade intermediaries had started flooding Delhi's various transport centres, with lower-taxed tyres and tubes brought from Haryana at 8 per cent VAT rate, he added.

When contacted, a Haryana tax official said there was a delay in decision making, as there were a whole lot of items where the rate needed to be corrected and the government was also facing objections from various corners in case of certain commodities.

He, however, said the notifications would be issued in a week or two after all the anomalies were sorted out.

Delhi's tyre trade, with a turnover of more than Rs 900 crore per annum had, complained of trade diversions to Haryana, owing to the tax difference. Uttar Pradesh, the other neighbouring state, levies 12 per cent sales tax on tyres.

The All India Tyre Dealers' Federation (AITDF) has again approached the Haryana and Delhi governments and the empowered committee on VAT to intervene and take instant action.