The Delhi Government would be saving Rs.850 crore from increase in Value Added Tax on 32 different items that has been proposed in the Delhi Budget 2010-11.
As per the Budget, removal of deviation of these items would lead to additional revenue generation of Rs.850 crore. It has been clarified that the Government was earlier charging less VAT on these commodities than the suggested rate and so there was a deviation. But as the revenue collection was less due to a lower VAT rate and the Central Government also made deductions in compensation package to Delhi because of the deviation, the rates were revised.
On compressed natural gas, rope-making material like
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The rate of VAT has been increased from 5 per cent to 12. 5 per cent on all other scraps, dry fruits, saffron and edible seeds
Diesel is the only substance on which VAT has been increased from 12.5 per cent to 20 per cent.
To raise additional revenue, the Budget also proposes removing the subsidy of Rs.40 on each domestic cooking gas cylinder – on which nearly Rs.170 crore was being spent per annum -- and proposes to tap the items of luxury.
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Finance Minister A. K. Walia has also proposed an increase in VAT on writing instruments costing over Rs.1,000 from 5 per cent to 12.5 per cent. Similarly expensive watches are all set to get more expensive with the VAT being increased on them from 12.5 per cent to 20 per cent.
Mobile phones and all mobile accessories above Rs.10,000 would also entail higher VAT of 12.5 per cent as against 5 per cent earlier and garments selling for over Rs.5,000 would also attract VAT at this higher rate.
The measures to tax luxury items would general additional revenue of Rs.100 crore. Besides, VAT has also been enhanced on aerated drinks from 12.5 per cent to 20 per cent to general additional revenue to the order of Rs.10 crore.