lieutenant Governor Najeeb Jung has decided to keep in abeyance a proposal of the Trade and Taxes department to increase taxes on essential items that would affect daily life of Delhi residents.
Faced with resources crunch and short fall in revenue collection, VAT top brass moved a proposal to hike in CNG, diesel, sugar, energy drinks and packaged food items. This according to analysis is politically correct decision at a time when food inflation has registered has increased. By refusing to accede to the proposal, lieutenant Governor has played it safe.
Top sources told The Pioneer that the Trade and Taxes department of Delhi Government has proposed to hike in Value Added Tax in several essential commodities including CNG, diesel, energy drink, sugar, packaged items to improve financial health in the current financial year. As per proposal, the VAT department has proposed tax on CNG from zero percent to five per cent; diesel from 12.5 per cent to 20 percent, energy drinks from 12.5 per cent to 20 per cent. The department has also proposed to bring several food items under the taxation. Currently, sugar is out of taxation purview. But the department has proposed five per cent VAT on it. Similarly, there is no taxation on packaged food item. In the proposal, it has proposed one percent VAT on it.
Political analysts say that at a time when the political situation is very fluid and there is serious talk of Delhi BJP in forming Government in Delhi, lieutenant Governor did not want to create political storm by increasing VAT on essential commodities. “It was a political decision and lieutenant Governor may have thought it prudent to leave to city Government that would likely to come in existence very soon,” said political analysts.
Sources said that the department has expected to generate revenue Rs 1,500 crore from hike in CNG and diesel and food items. The revenue shortfall is 13-15 per cent in the first quarter of the fiscal year. Total target is fixed Rs 21,000 crore in the current financial year. It is noted that the department is finding difficult to meet the target as it had collected taxes in advance to meet the revenue target last year.