In the next fiscal, citizens of Delhi will not feel an increased pinch of the Value Added Tax (VAT) but may be faced with more expensive movie tickets. 

Presenting the annual budget on Thursday, Deputy Chief Minister Manish Sisodia said the VAT collection in Delhi had increased by 26 per cent as compared to the corresponding period last year.

delhi-VAT-chartHe said the government will not increase the VAT rate this fiscal and incorporate it only after the government scientifically analyses it.
“This government believes in providing a stable tax regime. We are not tinkering with the tax rates, barring a few clarifications to remove ambiguity in case of certain items. We do not want to alter tax rates without due thought and analysis. We are against playing to the galleries because of a tradition that finance ministers have raised or reduced taxes on items in the budget,” Sisodia said.

VAT is the main source of revenue generation for the Delhi government. Sisodia, however, said that his government does not wish to further burden those who diligently pay tax but said it will recover evaded tax by cracking down on corruption and ending raids on businessmen.

“It is estimated that we shall collect Rs 24,000 crore through VAT, which is 69.3 percent of the total revenue collections of the government. We have also noticed a growth of 37.6 percent in VAT collection in the last two months,” said Sisodia

The finance minister also reduced the rate of VAT on wood and timber from 12.5 percent to 5 percent. While wax was taxed at different rates under different schedules of the Delhi VAT Act schedules, the tax on wax has been made uniform at 5 percent.

In good news for households, 12.5 percent VAT charged on cutlery to 5 percent. “Since these items belong to the same family, it is proposed to reduce rate of tax on all utensils and cutlery items made of metals (including pressure cookers/pans) to 5 percent except those made of precious metals,” the finance minister said.
The government also proposes to impose an entertainment tax of Rs 40 on Cable TV/DTH Services. However, what might eat into weekend movie budgets is the government’s decision to impose a 20-40 percent hike in the entertainment tax on cinema halls.

“I also propose to increase the registration tax by 25% of the existing rate for all categories of private vehicles registered in the name of companies and partnership firms. The proposal will not affect individuals,” said Sisodia.