The Chhattisgarh government has decided to raise the value-added tax (VAT) by 1 to 1.5 per cent with effect from January 1, 2010.
The notification to this effect has been issued and the new VAT rate will come into force with the New Year, official sources in the department of commercial tax said. The rate hike will be on all the items.
The items taxed at four per cent earlier will now have to pay five per cent VAT, sources said, adding that the VAT on the items that were taxed at 12.5 per cent earlier would now increase to 14 per cent.
The state government is expected to mop up Rs 85 crore as additional revenues in the current fiscal with the increase in the VAT rate, sources added. In the fast financial year, it had collected Rs 39 crore as VAT.
The officials feel that the additional revenue will help to cover the loss following recession.
The revenue collection in the state has also suffered due to economic slowdown.
The Chhattisgarh Chamber of Commerce castigated the increase in VAT rate and said it would increase burden on common man.
People are already reeling under the pressure of price hike and the new rate will add new burden on them, Chamber President Sreechand Sunderani said.
The Chamber had demanded that the state government should roll back the VAT increase in the larger interest of the common man, Sunderani added.