Gujarat bows down to trade bodies, slashes VAT on many items

Ahmedabad, Apr 30 (UNI) The Gujarat Government has bowed to demands of several chambers and trade associations to exempt or reduce the value added tax (VAT) on a number of items.

VAT came into force in the state from April 1 following an amended bill in last budget session. On Friday night, State Finance Minister Saurabh Patel issued a notification to tone down the impact of VAT from a long list of items.

Incidentally, BJP-ruled Gujarat was one of the first states in the country to enact the VAT Bill in 2003, but sat over it, fearing discrimination by the then NDA Government at Centre.

Justifying the exemption and relaxations, Mr Patel admitted: ''The decision has been taken by Chief Minister Narendra Modi following representations by various chambers and traders' associations.'' ''It was also necessary to keep goods produced in Gujarat competitive vis-a-vis other states,'' he said.

Mr Patel said VAT has been totally withdrawn from all items produced by organisations recognised by Khadi Gramodyog as well as Khadi and Village Industries Commission (KVIC).

In other cases, it has been reduced from 12.5 per cent to 4.0 per cent for industrial inputs and made it 4.0 per cent for all rented goods across the board.

Sixteen other items have also been totally exempted from VAT, which include bangles, 'mangal sutras' (except bullion), hairpins, flat and puffed rice, jaggery, animal cart parts, bones and bone powder, synthetic gems (Cambay), seeds (except imported), scales (except electronic), handkerchiefs, handmade paper, raw wool and saree 'falls'.

As parts of the government's decision to spare the farm sector as far as possible, 12.5 per cent VAT has been totally removed from agricultural equipment and implements like axe, spade, huller, thrasher parts, parts used in handcarts and animal carts (except tyre and tube), harmonium and other musical instrument parts.

The government has also reduced VAT from 12.5 to 4.0 per cent in case of a large number of parts of plants and machinery, sewing machine, carpenter-blacksmith tools, tractor-trailer, tyres and tubes used in carts, bicycles, medical equipment and devices, besides implants.

The government has decided to charge VAT at 1.0 per cent on hosiery, bulk drugs, certain bicycle parts, newsprint and re-rolled steel products, keeping in view representation by traders' associations.

VAT has been reduced from 12.5 per cent to 4.0 per cent in case of 17 items, namely mouth freshners, 'gulkand', 'chikki', 'revdi', 'daliya', plastic 'nivar', non-ferrous metal castings, biomass brickets, glass beads, measuring instuments, handmade cement goods, hollow bricks, rubber balloons, unbranded slippers, machinery used in work contract, plastic and thermocol cups, saucers, tumblers and napkins.

The industrial goods on which VAT has been fixed at 4.0 per cent include aromatic chemicals, asbestos fibre, bitumen, capacitors, caesin, chalk powder, narrow fabrics, LPG for feedstock, plastic lumps, plastic master batch, rubber foam and thread, electric motors' transformers and stampings, waste paper and refractory ceramic fibre.

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