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No change in VAT rates for now

February, 11th 2013
Chief Minister Jagadish Shettar, who also holds the finance portfolio, has not effected any immediate changes in the two major Value Added Tax (VAT) slabs of 14.5 pc and 5.5 pc in the budget proposals for the year 2013-14. In other words, there will be no immediate change in tax on purchases of commodities. These tax slabs will continue till July 31, 2013 after which the government proposes to cut VAT?rates by 0.5 percentage points. That is the 14.5 pc slab will be restored to 14 and the 5.5 pc slab to 5. The slabs had been hiked in August last to mobilise Rs 1,000 crore for drought relief works. The proceeds went to fund the crop loan and interest waiver scheme for farmers. In the budget proposals for 2013-14, Shettar has decided to reduce VAT rates on some commodities from 14.5 pc to 5.5 pc effective from April 1, 2013. These include footwear costing up to Rs 200, door and windows made from waste plastic, arecanut dehusking machines, cocoa husk, soya bean edible oil, domestic containers, air compressors and refractory monolithic powder. ? Tax exemptions The government has decided to continue tax exemption on paddy, rice, wheat, pulses and products of rice and wheat for one more year from April 1, 2013. Tax on purchase of supplementary nutrition food made under the Integrated Child Development Scheme for supply to children, pregnant women, nursing mothers and adolescents by anganwadi centres run by Women and Child Development department would be reduced from 14.5 pc to 5.5 per cent. The Commercial Taxes department has done well this fiscal and is all set to meet its budgetary target of Rs 32,000 crore. The government has also announced several reform measures. Payment of 50 pc of disputed amount required to be made by the dealers for filing appeals against orders demanding tax in excess of the amounts declared by them and for obtaining stay for its recovery would be reduced to payment of 30 per cent. The current time of 10 days given for payment of additional tax demanded on assessment and reassessments would be increased to 30 days.