Guj exempts textiles, diamond from Vat

Ahmedabad, March 29 | Updated: Mar 30 2006, 06:33am hrs
Gujarat government has announced a slew of changes in tax rates of various commodities, and has provided exemptions to different commodities including textiles, tobacco, sugar, diamond and indigenous seeds from value added tax (Vat).

Announcing this in the state Assembly, Saurabh Dalal, state finance minister, said, After taking into account various representations by industries and traders, the state government has taken these decisions in a bid to avoid confusion and difficulties faced by traders.

Gujarat is all set to implement Vat from April 1, 2006, for which an amendment Bill has been passed in the Assembly, and a notification related to Vat is on anvil, Mr Dalal said.

As per the decisions announced on Wednesday, textile, tobacco, sugar, diamond, indigenous seeds have been exempted from Vat. Justifying the move on the grounds that there are special provisions in Vat Act of the state for textile, tobacco and sugar (except imported), Mr. Dalal said, this decision has been taken in the interest of traders.

Giving details about other changes, he said diamond and indigenous seeds have been exempted. Earlier they used to attract 1% and 4% tax respectively, while tax on sand, rubble and blakstrip has been reduced to 4% from 12.5%. Marble, granite and cota stone have also been exempted from entry tax.

Another significant decision is that traders having a turnover of less than Rs 50 crore will have to pay lumpsum tax at the rate of 0.5%. This change will bring some relief to traders, said Mr Dalal, adding, Hotel and restaurant, bakery and brick producers, classified as special manufacturers under section 14 of the Act, will have to pay lumpsum tax at the rate of 4%, and 2% respectively.

On the other hand, for works contracts it has been pegged at 2%.