The decision was taken during a Cabinet meeting chaired by Chief Minister Akhilesh Yadav.
"The Cabinet decided to exempt gulkand from VAT," an official spokesman said here.
Gulkand, which is prepared by mixing rose petals with sugar, is considered as an Ayurvedic tonic due to its cooling properties.
It not only provide remedy for reduction of "pitta" and heat in the body, reduction in eye inflammation and redness, strengthening of the teeth and gums and the treatment of acidity.
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It had been traditionally used as a cooling tonic to combat fatigue, lethargy, muscular aches, biliousness, itching, and heat-related conditions.
Besides medicinal value, gulkand is a treat for paan lovers in UP.
According to experts UP is one of the leaders in Gulkand production in the country, with Kannauj being a major hub.
"In terms of paan production UP comes at number four after Bengal, Odisha and Madhya Pradesh," economic expert Siddhath Kalhans said.
The official spokesman said that gulkand was manufactured under small scale industry, which provide employment to a large number of people.
"Exempting gulkand from VAT will promote those involved in rose farming and small scale industry," he said.