The Government of National Capital Territory of Delhi on Monday announced increase in the value added tax (VAT) on natural gas (CNG), diesel, dry fruits, Desi ghee, glucose and tea while withdrawing the Rs. 40 subsidy on LPG (cooking gas) in the Budget 2010 and cited Commonwealth Games as the reason.
Addressing media, after presenting the Budget, Delhi's Finance Minister A K Walia said the enhancement in VAT rates and withdrawal of subsidy on LPG were necessitated by the increased expenditure on infrastructural projects related to Commonwealth Games 2010.
Walia said that in view of increased expenditure due to the Commonwealth Games related projects and schemes and inadequate collection of taxes due to down turn in economy, additional sources of revenue are required.
Walia, however, assured that there would be no extra burden on the "common man" as the prices of essential commodities would not be increased.
"In any case with the implementation of GST next year, the subsidy on most items will have to be withdrawn," Walia said.
The Budget removes the current subsidy of Rs 40 on the LPG which will lead to increase in prices to Rs 322.80 per gas cylinder.
The withdrawal of subsidy will relieve the State Government of a burden of Rs 160 to Rs 170 crore per annum.
The VAT on CNG for use in transport sector has been hiked to five per cent which will translate into a hike of Rs 1.09 per litre while the VAT on diesel have been increased from 12.5 per cent to 20 per cent which amounts to a hike of Rs 2.37 per litre.
Moreover, the VAT on writing instruments, watches above Rs 5,000, mobile phones and accessories above Rs 10,000 and readymade garments has also been enhanced.