VAT relief for Delhi traders

190 items shifted to 4% rate.

The Delhi government today earmarked about 190 items, including 159 industrial inputs, that will attract a base rate of four cent value-added tax (VAT).

Chief Minister Sheila Dikshit said she would push for a roll-back of the 20 per cent VAT on diesel as Delhi had lost 50 per cent business on diesel sales in the first 13 days since the new tax was implemented.

The state government would also take up the issue of a reduction in the tax rate on domestic LPG, she added.

"We will push for a reduction of VAT on diesel and LPG. Punjab and Haryana have not hiked their rates and we do not want Delhi to lose business. We have reduced the rate of items on which we had received representations from businesses and if some items are still left out, we will take them up," Dikshit said.

The Delhi government has also exempted life-saving drugs and devices, ayurvedic and unani medicines specified in the third schedule of the Delhi sales tax, all vaccines approved by the World Health Organisation, artificial limbs, hearing aids, ready-made khadi garments, silk fabrics, footwear (with a market price of up to Rs 300), joss sticks, plastic waste, scrap glass, exercise books for students (having a market price of up to Rs 30) and hosiery items (with a market price of up to Rs 50) from the purview of VAT.

Speaking on the additional burden on households, Diskhit said, "The Rs 13 hike in domestic LPG price is not warranted and we will push for a reduction in the VAT rate."

Items that will now attract the base rate of four per cent include silk sarees, dry fruits, educational items, toys (except electronic toys and games), utensils (except crockery, glazed and glass items), kitchen ware, agriculture spare parts, glucometer, strips and syringes, candles and paraffin wax, vermicelli maize products, khoya, achar and loosely-sold murabba.

"With the introduction of VAT, all the items for which no rate was specified got shifted to the highest rate of 12.5 per cent. This has caused problems and we have reduced some of the rates and will take up the issue with the empowered committee on VAT when it meets on Friday," Delhi Finance Minister AK Walia said.

"Delhi collects about Rs 45 crore in tax on diesel. Therefore, the loss incurred owing to a dip in sales in 13 days will amount to Rs 10 crore," Walia added.