The Delhi Government has introduced “the Delhi Value Added Tax (Second Amendment) Bill 2015” to increase the upper limit on Value Added Tax (VAT) from 20 per cent to 30 per cent on several goods including petroleum products, liquor, narcotics, tobacco products, brake fluid, lottery tickets and aerated drinks.

Once the Bill is passed it will give the Delhi Government the power to hike VAT on petroleum products and some other items up to 30 per cent.

In a move that will bring relief for traders, the Bill proposes to reduce the per day penalty amount from Rs500 to Rs200 in the event of delay by a dealer in furnishing  information relating to change in the nature of business. It also seeks to reduce the per day penalty amount from Rs1,000 to Rs200 in the event of delay by a dealer in furnishing information relating to closure of business.

Introducing the “the Delhi Value Added Tax (Second Amendment) Bill 2015”, Delhi Deputy Chief Minister Manish Sisodia on Monday said that amendment to the Act will help remove deficiencies and legal lacunae in the Bill and it will make the tax administration simpler and convenient for the dealers. According to Sisodia, the Bill is being amended to bring uniformity on VAT rates among neighbouring States.

The Bill seeks to make enabling provisions for levy of VAT in respect of goods enlisted in the Fourth Schedule at different rates instead of a flat rate of 20 per cent, with the condition that such tax rate will be higher than 12.5 per cent (i e rate of tax applicable in respect of unspecified goods) but will not be more than 30 per cent.

It also seeks to dispense with the requirement of making adjustments to output tax by the selling dealer and input tax by the purchasing dealer in the event of release of post sale discounts or incentives  by the selling dealer.

The Bill increases the time limit from 15 days to 45 days  for seeking security from dealers claiming refund if security is felt necessary while processing and examining such refund claims.

According to BJP MlA Vijendra Gupta, the AAP Government has claimed that there is no hike in VAT rate in the Budget 2015 but the proposed amendment to the VAT Act has reflected the hidden intention of the Government.

“If they do not want to increase in the VAT rates, then why the Government is bringing Amendment to the Act to increase maximum limit of taxation from 20 per cent to 30 per cent. The AAP Government will certainly increase VAT rate on goods, that’s why it is brought the amendment Bill,” Gupta alleged.

Former Congress MlA and former Speaker of Delhi Assembly, Yoganand Shastri also slammed the

AAP Government for increasing the cap from 20 per cent to 30 per cent.

“What is the point of increasing the cap,” Shastri questioned. “For instance, currently VAT rate on diesel is 12.50 per cent and on petrol it is 20 per cent. Once the Bill is passed, the Delhi Government will be empowered to increase VAT up to 30 per cent,” he said.