The state government is likely to announce a half-to-one per cent increase in Value Added Tax (VAT) shortly.

At present, there are four slabs of VAT in Uttar Pradesh - zero per cent, 1 per cent, 4 per cent and 12.5 per cent. VAT is proposed to be increased by half per cent in the 4 per cent slab and one per cent in the 12.5 per cent slab. The increase is estimated to fetch additional revenue of Rs 90 crore every month.

According to official sources, VAT on several commodities like electronic goods, cellphones and computers was increased on September 2008 and then rolled back on January 1, following protests by traders and industrialists.

The government had then decided that instead of an increase in VAT on specific products and commodities, there should be marginal hike across the board on all goods and products. This approach will fetch more revenue and at the same time, wont burden the consumers.