Starting Thursday, Delhi shifted to a 5% Value Added Tax (VAT) slab from 4%. The shift to the 5% slab will impact the prices of medicines, surgical and medical equipment, IT and electronic products like computers and software, and industrial inputs, among other things. The five percent slab will cover 170-odd items.

The draft amendment bill proposing a hike in VAT had been met with much opposition by the trader lobby. The Confederation of All India Traders had earlier raised concerns over the proposed increase in the VAT slab, saying it would lead to a hike in the prices of necessities and affect the common man.

But the government moved to pass the amendment Bill in the Delhi assembly in December, and on Wednesday notified the scrapping of the 4% slab and its replacement with the 5% slab.

But Delhi Fianance Minister AK Walia is clear the shift to the 5% slab is in keeping with the Central Government's directions on the VAT regime. "All items under the 4% slab in the VAT Act are now under the 5% slab. The shift to a 5% slab will lead to an escalation in revenue collections," Walia said.