The Punjab government has proposed value added tax (VAT) on pre-owned car dealers, making second hand cars costlier, and it is likely to be approved by the Cabinet at its meeting on Wednesday.

Sources said it has been proposed by the state excise and taxation department to levy VAT on vehicles which are bought from the pre-owned car dealerships in the state and is on the agenda of Wednesdays cabinet meet.

At present there is no VAT on second hand vehicles bought from these dealerships. It has been proposed to charge Rs 3,000 as VAT on vehicles that are less then 1000cc, while for vehicles with more than 1000cc the VAT will Rs 5,000.

The state government expects to collect Rs 15 crore every year through VAT on pre-owned car delaers.

Also in the cabinet meeting, VAT on jaggery is likely to be increased to 5 per cent from 4 per cent.