Delhi Government can now raise VAT to 30%

Till now, the cap on the VAT on 11 items under the fourth schedule is between 12.5 and 20 per cent. The items that could be impacted by a higher rate are mostly petroleum and tobacco related. They are naptha, aviation turbine fuel, spirit, gasoline, furnace oil, wax (except candle wax), any mixture and combination of above products, foreign liquor and Indian-made foreign liquor, country liquor, narcotics, molasses, rectified spirit, lottery tickets, brake fluid, tobacco gutkha, unprocessed tobacco, bidis and tobacco used in making bidis and hooka tobacco, aerated drinks and watches costing above Rs 5,000.

Government sources said the cap on VAT has been raised keeping in mind the rates of these products in the neighbouring states. The government especially wanted to target petroleum-related items. “The government will no longer need to call a session to get approval for a hike,” an official said.

Opposition leader Vijender Gupta said the bill amounted to “cheating” the people: “You promised not to increase VAT and now you have given yourself powers to do so. Any increase will be borne by consumers.”