The Delhi Value Added Tax (Amendment) Bill, 2009, was introduced in the Delhi Assembly by Finance Minister A. K. Walia on Monday amid protest by the opposition BJP which said it would end Delhi’s distributive character and was against the interests of the people and the traders.
As soon as Dr. Walia got up to introduce the Bill, Leader of Opposition V. K. Malhotra objected, saying that while it was being stated that it intended to remove the anomalies, it would increase VAT from 4 per cent to 5 per cent.
Prof. Malhotra said since its aims and objectives were wrong, he was opposed to its introduction. As the introduction was put to a voice vote, senior BJP leader Jagdish Mukhi claimed that the “nos’’ were more and demanded a division of the House. As the “ayes’’ were declared to have won, the BJP members walked out of the House in protest.
As per the Delhi Government, the Delhi Value Added Tax Act, 2004, is proposed to be amended to incorporate certain provisions aimed at addressing on an urgent basis some fresh anomalies and discrepancies which have come to notice in the course of the implementation of the Act.
It said the amendment was needed as certain provisions in the existing Act require appropriate amendment for making tax administration more efficient and effective and also to plug the loopholes in the Act for better tax compliance.
It was mentioned that the Centre had asked the State Governments to raise Value Added Tax rate from 4 per cent to 5 per cent to partially compensate the loss incurred due to phasing out of Central Sales Tax. The Centre also intended to make calculation of compensation to be paid for the year 2009-10 on the basis of presumption that the States had increased Value Added Tax rate from 4 per cent to 5 per cent from April 1, 2009.
In order to avoid loss on this account and also to generate additional resources, the enhancement of Value Added Tax rate from 4 per cent to 5 per cent had been proposed on goods specified in third schedule except declared goods under Central Sales Tax Act, 1956. This enhancement of tax rate is likely to generate an additional Rs.500 crore in resources.