Presenting the Budget for 2016-17, Deputy Chief Minister Manish Sisodia has made sweets, snacks, savoury items, marbles, ready-made garments, shoes, e-rickshaws, battery-operated vehicles, hybrid vehicles cheaper by slashing Value-Added Tax (VAT) rates from 12.5 per cent to five per cent.
Maintaining that Delhi has registered a growth of 17 per cent, Mr. Sisodia said Chief Minister Arvind Kejriwal-led government was encouraging ease of doing business. “We have brought down the VAT on par with the neighbouring States. Soon, Delhi will become the State with the lowest VAT rates in the country,” he said.
VAT constitutes 65 per cent of the total tax revenue and most of the developmental works depend on its collection. The collections in the current fiscal have touched Rs. 20,000 crore, but this is still short of the revised target of Rs. 21,000 crore, which itself had been lowered from Rs. 24,000 crore.
“People would think that by bringing down VAT rates, how would we generate revenue? But we found that by lowering the tax rates, there was more compliance and we got more than the previous target,” he said.
Mr. Sisodia has proposed rationalising the VAT rates that will enhance tax compliance to offset any revenue loss arising from low VAT rates. The rejigging of items in the current four-layered VAT structure will also make for streamlined tax collecting operations. “Multiple entries to the same item or a common group of items are a great source of ambiguity and confusion, which lead to harassment of traders and create a window for reporting manipulation leading to undesirable behaviour. We have tried to simply it by bringing them under one entry to the extent possible,” he said.
The government has broadened the definition of tobacco products, inverters and UPS, and non-ferrous metals. “Earlier, people wouldn’t include Khaini, zarda, surti in the tax slabs but now we have modified the entry of tobacco and tobacco goods,” he said.
Under the ‘Bill Banao Inam Pao’ scheme, which helped eliminate tax evasion, the government had last month collected Rs. 1 crore extra tax, he added. The government has also introduced another reward scheme to acknowledge market and trade associations contributing revenue over and above the targets set for the year. “Top 10 performing market associations will get cash reward of Rs. five lakh each. This money will be used for beautification of the market,” the deputy CM said.
