Bihar slashes VAT rates

Press Trust Of India / Kolkata/ Patna April 01, 2006
In a bid to bring uniformity in value-added tax with neighbouring states of Jharkhand and Uttar Pradesh and shore up its revenue, the NDA government has effected a drastic cut on VAT on more than 100 items from 12.5 per cent to four per cent while making 27 odd items free from the tax.

Announcing this, deputy chief minister Sushil Kumar Modi, who also holds the finance portfolio, told reporters that the state cabinet had given its nod to proposals to this effect.

Aiming to expand jute industry in Bihar, he said that the vat on tax on raw jute was brought down from four per cent to zero.

Similarly, essential commodities like cattle feed, husk of pulses, de-oiled cake, wheat bran supplements and additives of such feed, paddy, rice, wheat, pulses, flour, atta, maida, suj and besan would now be taxed at the rate of one per cent, down three per cent earlier, Modi said.

Other items which were free from VAT, include conch shell, conch shell products, earthen pot, fishnet, fishnet fabrics, and seeds of fish, prawn and shrimp, gur, jaggery and rub gur, handicrafts, household articles made of brass, human blood and blood plasma, indigenous handmade unbranded soap, lac and shellac, mats, locally known as chatai, other than those made of plastic, animal semen including frozen semen, he said.

Modi said that VAT was also reduced on household goods such as jugs, mugs, and buckets made of iron and steel, aluminium, plastic or other material, except those made of precious metals, from 12.5 per cent to four per cent.

With the decision to effect drastic reduction in VAT, Modi said that the government would be able to increase its revenue through greater compliance of provisions of VAT and check tax evasions saying that the state government had fulfilled its promise to reduce the vat, deputy chief minister urged the businessmen to cooperate in payment of taxes failing which stern punitive action will be taken against them.