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Hike in VAT on sugar, tobacco

HYDERABAD: The state government has proposed to increase value added tax (VAT) on some goods there by getting an additional revenue of around Rs 1,300 crore. Three bills relating to VAT

Published: 23rd March 2012 03:35 AM  |   Last Updated: 16th May 2012 06:40 PM   |  A+A-

HYDERABAD: The state government has proposed to increase value added tax (VAT) on some goods there by getting an additional revenue of around Rs 1,300 crore.

Three bills relating to VAT were introduced in the state Assembly on Thursday.

The AP Value Added Tax (Amendment) Bill aims to exempt goods like zari, fabrics and garments produced and sold by the powerloom units at the first point of sale.

The tax on RCC, PCC pipes and cement poles would be reduced to five per cent on par with other states.

VAT on non-woven fabrics will be 5 per cent. The government proposed to increase VAT on beedis from 14.5 per cent to 20 per cent.

The Centre has omitted textiles and sugar from the purview of levy of additional duties of Excise enabling the state governments to tax these items under VAT.

The levy of five per cent tax on sugar would fetch a revenue of Rs 600 crore per annum for the state government.

By increasing the lower slab of VAT from 4 to 5 per cent on certain goods, the state would get an additional revenue of Rs 1,200 crore per annum.

Due to reduction of tax on RCC and PCC pipes and cement poles from 14.5 to 4 per cent the revenue loss would be about Rs 4 crore per annum.

Likewise on account of increase of tax on tobacco products like gutkha, khara masala and cigarettes from 14.5 per cent to 20 per cent, the estimated gain of revenue would be Rs 170 crore.

Another Bill AP Value Added Tax (Third Amendment) Bill, 2012 proposes to give tax exemption to traders involved in food and drinks served in restaurants, eating houses up to a turnover of Rs 7.5 lakh from the existing Rs 5 lakh.

The maximum threshold limit for annual turnover in respect of turnover tax liability is proposed to be raised to Rs 50 lakh from the present Rs 40 lakh.

Due to this facility to traders the estimated loss of revenue for the government would be Rs 11.25 crore per annum.

Another Bill AP Value Added Tax (Second Amendment) Bill-2012 was also introduced in the Assembly which will replace the ordinance.

The Bill proposes to levy 4 per cent tax on contract workers of residential and commercial buildings, having a turnover of Rs 5 lakh to Rs 1.5 crore.

This will give an income of Rs 90 cr per annum for the government.



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