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Delhi Government can now raise VAT to 30%

Not increasing the value-added tax directly in the Budget, the Delhi government on Monday introduced a VAT Amendment Bill that will allow the government to hike the tax on 11 goods by up to 30 per cent in future.

Till now, the cap on the VAT on 11 items under the fourth schedule is between 12.5 and 20 per cent. The items that could be impacted by a higher rate are mostly petroleum and tobacco related. They are naptha, aviation turbine fuel, spirit, gasoline, furnace oil, wax (except candle wax), any mixture and combination of above products, foreign liquor and Indian-made foreign liquor, country liquor, narcotics, molasses, rectified spirit, lottery tickets, brake fluid, tobacco gutkha, unprocessed tobacco, bidis and tobacco used in making bidis and hooka tobacco, aerated drinks and watches costing above Rs 5,000.

Government has commented that VAT has been raised keeping in mind the rates of these products in the neighbouring states. The government especially wanted to target petroleum-related items.

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