The Aam Aadmi Party-led Delhi Government, on Monday, tabled a proposal to amend the upper limit of the current Value Added Tax (VAT) regime, which is the source of maximum revenue for it, by an additional ten per cent.
Sought to be increased from the existing upper cap of 20 per cent to 30 per cent, the amendment is expected to make everything from using and maintaining private transport to purchasing flight tickets and goods such as aerated drinks and liquor to tobacco, expensive watches and even candles liable to get dearer on the pocket of the average Delhiite over the coming days.
Likely to be passed by the AAP-dominated Delhi Assembly on the final day of its budget session on Tuesday, the objective of the Delhi Value Added Tax (Second Amendment) Bill 2015, according to a senior Government official, was to make “enabling provisions for levy of VAT” in respect of goods enlisted in the Fourth Schedule – mostly common consumables and fuel — at different rates instead of a flat rate of 20 per cent.
The condition, however, was that such tax rate will be higher than 12.5%, that is the rate of tax applicable in respect of unspecified goods, but will not be more than 30 per cent. Though the Government had, while presenting its Rs. 41,129 crore budget last week, claimed its was a “tax-free budget”, the amended tax cap will now allow it to increase prices of commodities with much more ease than former Governments.
On his part, Deputy Chief Minister Manish Sisodia, who tabled the said Bill at the Delhi Assembly on Monday, said that the Government was not planning an increase in VAT and that the proposal had been brought in “only for the sake of flexibility.”
A Government official said that the amendment was also sought to bring uniformity in tax rates with neighbouring states such as Punjab, Haryana and Himachal Pradesh which had, at a meeting last month, agreed to move towards uniformity in tax rates and develop a common market to boost trade.
Uniform taxation would also ensure that the said four States had common rates for fuel, excise and other household goods, the official added.
The amended bill will also seek, according to Mr. Sisodia, to facilitate online filing of application for cancellation of registration. The requirement of submission of registration certificate in physical shape was also being dispensed with.
Mr. Sisodia said that the move would also increase the time limit from 15 days to 45 days for seeking security from dealers claiming refund if security deposit is felt necessary while processing and examining such refund claims.
It would also reduce the per day penalty amount from Rs 500 to Rs 200 in the event of delay by a dealer in furnishing information relating to change in the nature of business and also a reduction to Rs. 200 from a penalty of Rs. 1000 in the event of delay by a dealer in furnishing information relating to closure of business.
