Auluck: Delhi budget to today: Likely to cut VAT, clothes to be cheaper

Delhi budget to today: Likely to cut VAT, clothes to be cheaper

The Delhi budget is likely to bring some relief for the middle class as products such as shoes, ready-made garments, watches, upholstery and marble tiles are likely to become cheaper in 2016-17. Sources said the AAP government is all set to propose a reduction of value added tax (VAT) on these items.  

The tax on dining and drinking in restaurants and bars is unlikely to change but eatables such as namkeens and sweets may become cheaper, sources said.

Deputy chief minister Manish Sisodia, who also holds the finance portfolio, will present his second full budget in Delhi assembly today.

Officials said some products, which are largely of interest to middle and high income groups, are likely to get cheaper as VAT rate is being revised from 12.5% to 5%. “The government has decided to rationalise the price-based tax slabs and bring certain items under the same category,” a senior Delhi government official said.

Sources said the government decided to rationalise the rates due to buoyancy in tax collection reflected in the spike in overall tax collection in 2015-16.

“Some experiments were done last year in terms of tax rationalisation. For example, tax rate on timber products was brought down to 5% from 12.5%. But the revision did not affect the overall tax collection in that segment,” an official said. 

He said tax collection was being rationalised on other products as well and the benefits being passed on to the consumers. “If we witness a dip in tax collection, corrective measures could be taken in due course,” the source said. 

Officials said the budget size for 2016-17 is likely to increase by about 10% as compared to the previous financial year. “The budget size is likely to be over Rs 45, 000 crore this time…from Rs 41,000 crore during 2015-16,” an official said.