VAT list may rise from 550 to 2,000 items

In a bid to to remove anomalies and bring in uniformity across states, the empowered committee is likely to extend the list of items coming under Value Added Tax (VAT) regime from 550 to 2,000.

The move assumes significance as it will make classification of items proper and give a clear picture of impact of VAT on prices of various commodities.

Though the VAT White Paper released on January 17 listed 550 items under VAT, states like Maharashtra and Haryana already classify over 1,000 items as industrial inputs and outputs.

State government sources said the figure in White Paper is "incorrect". Confederation of All India Traders (CAIT) has also pointed to discrepencies in VAT list and rates of various states that have passed the VAT bills.

When contacted, VAT panel secretary Ramesh Chandra admitted there was a confusion on the VAT list among states.

"There will be about 2,000 items under VAT," Ramesh Chandra said and added that HSN classification used by Commerce and Finance Ministry will be adopted to classify various items under VAT.

The number of items coming under 0, 1 and 4 per cent VAT will remain be unchanged, while all other items would fall in the 12.5% tax bracket, Chandra said.

According to the White Paper on VAT, 46 natural and unprocessed local products is exempt from VAT.

About 270 items including drugs and medicines, all agri and industrial inputs, capital goods and declared goods would attract 4% VAT. Precious metals like gold and bullion would be taxed at 1%.