VAT rates on essential items differ widely across states

VAT rates of essential items like atta, maida, tea, cereal and pulses are showing glaring differences across the states, according to trade body CAIT.

Even capital goods, tools and stationary products show a difference of 8.5 per cent in states like Delhi, West Bengal, Maharashtra, Andhra Pradesh and Punjab.

According to Confederation of All India Traders (CAIT), states like West Bengal and Delhi have exempted atta, maida, cereals and pulses fully while Punjab, Andhra Pradesh, Bihar and Jammu and Kashmir have imposed 4 per cent VAT on them.

The empowered committee has given states the option to either exempt fully foodgrains or impose 4 per cent on them. However, the VAT panel's chairman Asim Dasgupta is not clear whether to treat atta, maida, cereals and pulses as "foodgrains".

Similarly, some states have taken the advantage of the option to impose either 4 or 12.5 per cent VAT on tea. As a result, tea attracts 4 per cent VAT in West Bengal, Delhi and Jammu and Kashmir, while it is attracting 12.5 per cent in Punjab, Maharashtra, Bihar and Andhra Pradesh.

West Bengal finance minister Asim Dasgupta imposed 4 per cent VAT on capital goods and used cars. But Delhi, Punjab, Maharashtra, Andhra Pradesh, Bihar and J&K kept them under the 12.5 per cent slab.

Similarly, computer consumables attract 4 per cent rate in Andhra Pradesh and Bihar, while they draw 12.5 per cent in West Bengal, Delhi, Punjab, Maharashtra and J&K.

Dasgupta had yesterday claimed that variations in VAT rates among states are not significant. He had said only in a few states deviations have been noted by the empowered committee.

Empowered committee, which met for two days on April 15 and 16, will remove the variations in VAT rates in its next meeting on April 25-26.