Value Added Tax on food items may be reduced to 1%
June, 17th 2011
After increasing Value Added Tax (VAT) on essential articles last year from four to five percent, the UT Administration is now mulling bringing the VAT on food items down to one percent.
Sources in the UT Excise and Taxation department said that a decision regarding this is likely to be taken within a week. Since the UT Administration follows Punjabs policies in this matter, a proposal was made only after the neighbouring state decreased the percentage of VAT collected on essential food items including food grains, branded flour and pulses.
We are currently studying the pattern of VAT as levied in Punjab. Presently, the deputy commissioner is away. As soon as he comes back, we will be holding meetings in this regard and only then a decision will be taken, said a senior official of the department. Officials also maintain that the proposal was only made when the UT Excise department received a number of representations from various organisations to roll back the hike as done in other neighbouring states.
It was only in the last financial year that the UT Administration after receiving a directive from the centre, had hiked the VAT on Schedule B items (essential articles) such as kitchenware, computers, stationery items, electronic gadgets, skimmed milk and handicrafts among others.
At that time, the Union Territory of Chandigarh was the only one levying VAT at 4 per cent while the rest of the country was levying VAT at 5 per cent. In fact, UT Administration had in the recent past also sought exemption on food grains from the Centre on the plea that it was not a food grain producing state and thus should be exempted from VAT like many other states.
Parliamentary Committee holds meeting on excise
The Parliamentary Committee on subordinate legislation today held a meeting with the officials of the UT Administration on excise matters. UT Finance Secretary V K Singh made a presentation, elaborating on UT Excise Policy. The committee asked questions regarding the excise policy. The officials of the UT Administration explained that the UT follows Punjabs pattern and has been earning good revenue through excise year after year.