Sixth Pay Commission: Entry tax levied, VAT leaps from 4% to 21%

Express News Service
Sep 20, 2008

Lucknow, September 19 Tea, mobile phones, television, laptops, electrical goods, steel, iron and their products, arms and ammunition and several other products are soon going to cost more in the state.
This after the state cabinet decided to impose an entry tax and increase VAT on these items on Friday.

While the rate of entry tax will vary from 2 to 3 per cent, the rate of VAT ranges from 12.5 to 21 per cent on different items from the present 4 per cent.

The new taxes will fetch an additional Rs 100 crore to the state exchequer per month. The cabinet, however, decided to reduce VAT on bhang from 32.5 per cent to 12.5 per cent.

Entry tax was first introduced in the state in the Kalyan Singh government in October 1999, with the aim to mobilise additional resources to meet the burden of the implementation of the Fifth Pay Commission report. The present BSP government, too, is under intense pressure to garner fresh resources to implement the Sixth Pay Commission’ report and pay the arrears by the end of the current fiscal.

Entry tax at the rate of one per cent is being imposed on iron and steel and all categories of motor vehicles and chassis, except tractor. The entry tax at the rate of two per cent will be imposed on aluminum and its products, barring utensils; all kinds of cables, laptops, televisions, tyre and tubes, except cycle tyres and tubes and tyres used in animal driven carts, and marble stones and tiles. As for cellphones and their batteries, an entry tax of three per cent has been levied, while five per cent on refrigerators, air-conditioners and air-conditioning plants.

The VAT on medicated soaps, massage creams, eye gels, sugar pills for medicinal use in homoeopathy, medical equipments, nut bolts, and screw fasteners has been increased to 12.5 per cent from the present 4 per cent.

The VAT on betelnut, meethi supari, machinery, tools, moulds, dyes, coffee, beans and seeds, cocoa powder, green tea leaf has been hiked to 12.5 per cent from 4 per cent.

VAT on computers, telephones and its parts, cellphones, satellite phones, DVD, CDs, teleprinters, wireless equipment, molasses, pipes of all varieties, including GI, CI and PVC, and several other electronic and electrical goods has also been increased to 12.5 per cent from 4 per cent.

The maximum leap was taken on turbine fuel, CNG and naphtha, which witnessed an increase from one per cent to 21 per cent.

For curbing fake drugs and adulteration in food products, the Cabinet approved a proposal for creating a food and drugs administration directorate in the state.

The cabinet also approved a proposal for the sale of 81 acres of land of the Irrigation Department to the Dadri power plant of the NTPC in Ghaziabad district for the construction of a reservoir. On the pattern adopted by the Centre for the implementation of the new contributory pension scheme, the cabinet gave its nod to the appointment of a Central Record Keeping Agency (CRA), a trustee bank and the fund managers. National Securities Depository Ltd was appointed as the CRA, Bank of India as the trustee bank and SBI, UTI and LIC as the fund managers.

A policy for the development of micro hydel projects was also approved.

Source: http://www.expressindia.com