In a bid to promote eco-friendly modes of transport in the national capital, the Delhi government has reduced value-added tax on hybrid cars, battery-operated vehicles and e-rickshaws from 12.5 per ce
In a bid to promote eco-friendly modes of transport in the national capital, the Delhi government has reduced value-added tax on hybrid cars, battery-operated vehicles and e-rickshaws from 12.5 per cent to 5 per cent. The revised VAT rates, which will effectively bring down the cost of such vehicles in Delhi, came into effect on Wednesday after a notification in this regard was issued by the city government on Tuesday.
The proposal was approved as part of the tax rationalisation plan in Budget 2016-17 that was passed almost one and a half months back. “This step, apart from promoting eco-friendly vehicles and reducing pollution in the city, will also bring relief to large number of entrepreneurs earning their livelihood by plying e-rickshaws,” a Delhi government official said.
“With reduction in VAT on hybrid vehicles, it is expected that a large number of consumers will shift from petrol/diesel vehicles to hybrid vehicles, thereby bringing down vehicular emission. There will be a tax rebate of lakhs of rupees for the buyers of hybrid vehicles with reduction in VAT on battery-operated vehicles. It is also expected that more players will come in the market thereby increasing availability and usage of these vehicles,” the official added.
Also, as promised by Delhi chief minister Arvind Kejriwal to make the VAT rates in Delhi the lowest in the country, the official said a number of steps have been taken to rationalise VAT rates. “In the last financial year, VAT on timber was reduced from 12.5 per cent to 5 per cent. In the current financial year, with the new rates coming into effect, VAT on a number of commodities including marble, sweets, snacks, schoolbags, footwear and readymade garments has been reduced significantly. General tax rate in Delhi is already low compared to other states,” the official said.
Apart from this, general public will also benefit due to reduced rates as VAT on footwear and garments has been reduced from 12.5 per cent to 5 per cent and footwear costing below Rs 500 is totally exempted from VAT. “Also, VAT on schoolbags has been reduced from 12.5 to 5 per cent. People can also expect reduction in cost of construction of their houses as marble will now be much cheaper as value-added tax has been reduced on marble from 12.5 per cent to 5 per cent. The VAT on watches has been reduced from 20 per cent to 12.5 per cent,” the official added.
The Kejriwal government added it is expected that the reduced rates of VAT will lead to better tax compliance.
