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Delhi govt presents zero tax budget: Watches, clothes may get cheaper
March, 29th 2016

Deputy Chief Minister Manish Sisodia presented a ‘zero tax budget’ Monday aimed at rationalising Delhi’s Value Added Tax (VAT) structure. The budget implies cheaper sweets, namkeen, watches, readymade garments, shoes and school bags, even as the government continues to focus on education, health and transport sectors.

Sisodia, who also holds the Finance portfolio presented a Rs 46,600 crore annual budget, with plan expenditure at Rs 20,600 crore, of which Rs 4,645 crore (23 per cent) was allocated to education, Rs 3,943 crore (19 per cent) to transport and Rs 3,200 crore (15 per cent) to health sector.

The government has also proposed a rationalised structure for Value-Added Tax (VAT), which is likely to make some items cheaper. “The government is committed to reducing tax arbitrage and it will attempt to keep a uniform rate with neighbouring states. For several items such as sweets, namkeen, watches and readymade garments, the lower tax rate in neighbouring states was causing erosion in our tax revenue. We have made efforts to remove such imbalances in our VAT structure,” he said.

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He added, “A tax of 12.5 per cent is levied on watches that cost less that Rs 5,000 and a tax of 20 per cent for those above Rs 5,000. The money on costly watches was going to neighbouring states. So we rationalised the tax at 12.5 per cent”.

Earlier, a VAT of 5 per cent was levied on schoolbags that cost less than Rs 300 and a tax of 12.5 per cent was applicable on those costing more than Rs 300. Now, a VAT of 5 per cent will be levied on all school bags.
Sisodia, who is also in charge of the education department, said 21 new schools and 8,000 new classrooms are currently under construction. The government has allocated Rs 102 crore for advanced teachers’ training in foreign universities and Rs 152 crore to impart vocational training to students from class IX to class XII in this year’s budget.

In the health sector, funds have been allocated for 3,000 new mohalla clinics and 150 polyclinics. The government has also allocated Rs 410 crore to supply free medicines.

The sizable allocation in the transport sector is for the procurement of 1,000 new standard size low-floor buses and 248 new mini-buses, among other things.

However, Leader of Opposition Vijender Gupta alleged that in its effort to “rationalise the VAT structure”, the government had imposed a tax of 5 per cent even on shoes that cost less than Rs 500, which were not taxed till now.

The VAT on the purchase of battery-operated vehicles like e-rickshaws and hybrid automobiles will also be lowered as part of the government’s anti-pollution plan. “This has been done to promote non-polluting vehicles and contribute to clean air,” said Sisodia.

Sisodia has also allocated Rs 676 crore to provide drinking water to all authorised and unauthorised colonies by December 2017 through pipelines.

The government has also proposed imposing a tax of 5 per cent on plastic waste, which was tax-free till now.

Expanding the definition of tobacco products, the government has proposed a tax of 20 per cent on tobacco and related products, like cigarettes, bidis, khaini and zarda.

To “reduce the tax burden on citizens and tourists”, the government has proposed to increase the threshold limit of luxury tax from Rs 750 to Rs 1,500 “per day, per room”. Sisodia said the government’s revenue from luxury taxes has increased by 36.7 per cent and the revenue from entertainment taxes has increased by 60 per cent.

 
 
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