» Value Added Tax (VAT)
» Items Covered in Indian VAT
Items Covered in Indian VAT
|550 items covered||
||270 items of basic needs, like medicine, drugs, agro & industrial inputs, capital & declared goods 4% VAT
||Rest 12.5% VAT. Gold & silver jewellery - 1%
|Tea-producing states options either percentage VAT||
||Petrol, diesel, liquor, lottery not included *
||Sugar, textile & tobacco excluded for one year
|Traders with turnover of less than 500,000 rupees are exempt from the new tax.|
Note : * Some states like Delhi have imposed VAT on diesel at 20%, which is higher than the 12% sales tax charged earlier. Similarly, Delhi imposed VAT on LPG at 12.5%, which is also higher than the previous sales tax rate of 8 percent.
All business transactions carried on within a State by individuals, partnerships, companies etc. will be covered by VAT.
"More than 550 items would be covered under the new Indian VAT regime of which 46 natural and unprocessed local products would be exempt from VAT", a PTI report quoted West Bengal Finance Minister and VAT panel chairman Asim Dasgupta as saying.
About 270 items including drugs and medicines, all agricultural and industrial inputs, capital goods and declared goods would attract four per cent VAT in India.
The remaining items would attract 12.5 per cent VAT. Precious metals like gold and bullion would be taxed at one per cent.
Considering the difficulties faced by the tea industry, it was decided that tea-producing states would be given an option to levy 12.5 per cent or four per cent subject to review in 2006.
Petrol and diesel would be kept out of VAT regime in India, which covers only marketable items.
Dasgupta was quoted as saying that the panel was yet to take a view on CNG.
Following opposition from some of the states, it was decided that states would have option to either levy four per cent or totally exempt food grains but it would be reviewed after one year.
Three items - sugar, textile and tobacco - covered under Additional Excise Duties, will not be under VAT regime for one year but the existing arrangement would continue.
The Indian VAT panel relaxed the threshold limit for traders coming under VAT regime from Rs 5-50 lakh of turnover from the previous stance of Rs 5-40 lakh.
Traders within this limit can pay a composite VAT rate of one per cent but would not be entitled to input tax credit.
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