Life-saving drugs exempted from VAT in Delhi

Life-saving drugs exempted from VAT in Delhi

Wednesday, April 13, 2005 (New Delhi):

Barely a fortnight after it was introduced, the Delhi Government today did a rethink on the value-added tax (VAT).

The state government has decided to exempt life saving drugs and other household items from the VAT regime.

In what was the first sign of Delhi government relenting in its absolute implementation of VAT, the state government today accepted that the implementation of VAT in its present form had led to an unnecessary price hike.

"Even the vegetablewalas who were not affected in any way have been increasing prices," said Shiela Dikshit, Chief Minister, Delhi.

"In these 13 days since the implementation of VAT, we got representations from various associations. Accordingly, we have corrected some of the lapses that existed in VAT," Dikshit told a press conference after the Cabinet meeting.

Balancing act

As a balancing act, the government today announced that VAT will not be applicable to life saving drugs, stationary upto Rs 30, footwear upto Rs 300 and hosiery upto Rs 50.

Also, tax has been brought down from 12.5% to 4% for utensils, dry fruits, educational toys and items of industrial use like chemicals and packing material.

VAT was implemented on April 1 to ensure uniformity of taxation but the experiments of the first 13 days have made it clear that uniformity is not possible in a federal setup.