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Hike in sales tax on 65 products anticipated

Hike in sales tax on 65 products anticipated
Sales tax is likely to rise from zero per cent upto 12.5 per cent in as many as 65 products, after the implementation of the value-added-tax (VAT) from April 1.

Experts expects a rise in the price of commodities to be more than seven per cent.

A member of the VAT implementation committee told Business Standard that sales tax on around 65 products from the open general prices (OGP) will be increased from zero per cent to four per cent or up to 12.5 per cent.

These products include Jute, Khadi products, toys and domestic products.

With the new sales tax, consumers will have to pay more, by about five percent to 13 per cent, than the existing price.

President of Gujarat Sales Tax Bar Association, Pradip Jain said, “The Gujarat finance minister has studied the VAT model of Maharashtra, Haryana and Karnataka.”

He also said that there will be a change in the rate of tax without prior permission of the empowerment committee.

“Also, the sale tax penalty will not be higher and there will be input tax credit,” added Jain.

Sales tax on branded iodised salt will be increased from current two per cent to four per cent, the source added.

Pallavi Acharya, a leading chartered accountant based in Ahmedabad, said a few commodities such as certain agricultural products, sugar and tobacco are exempted from the VAT.

“Addition of central sales tax, octroi and VAT will be applicable to each and every citizen of the state resulting price rise,” she added.

Acharya also said the state is likely to implement model of Haryana, Maharashtra or Karnataka for VAT.

“Though the Haryana model is successful upto some extend, no analysis has yet been done on it,” she added.

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