Small traders get breather with VAT exemption

Chief ninister Sheila Dikshit’s Budget has come as a gift for small traders. In her latest Budget, as a major relief to them she raised the threshold limit for registration under VAT from Rs 10 lakh to Rs 20 lakh.

“We would like to encourage voluntary tax compliance. Raids and inspections should be the exception,” she said.

“To encourage dealers to voluntarily admit their tax liablity, I propose that, subject to depositing the tax due, penalties up to 80 per cent of admitted tax would be automatically mitigated and even in cases where field inspections are carried out,” she added.

 Dikshit said a new composition scheme will come into effect from April 1 this year under which dealers would be allowed to pay a tax based on their overall turnover.

According to her, this scheme will enable the works contract dealers to discharge their tax liability in a simplified and hassle-free manner.

Dikshit also exempted value added tax on pepper spray, different flours and salt consumed during religious fasts by the Hindus and other communities, pencil and geometry boxes, thread used for flying kites. 

Apart from these, organic colours, gulaal and footwear below Rs 500 have also been exempted from VAT.

“For the welfare of children, I propose to exempt VAT on empty pencil box and also on charki and manja used for flying kites, all these are presently taxed at Rs 12.5 per cent,” she said.

To encourage the use of recycled tiles and kerbstone, the city government has also planned to keep such tiles VAT free, the chief minister said.

VAT will not be levied on organic manure produced by processing municipal solid waste (MSW) and the refuse derived fuel. VAT has been reduced to 5 per cent in case of desi ghee and LED lights which are known to be save power.

To improve the efficieny and transparency in the tax regime, a new facility of online registration under the Delhi VAT Act and the Central Sales Tax Act has been introduced with the objective to reduce the physical interface between the taxman and the tax payers.