The Delhi government Wednesday slashed the Value Added Tax (VAT) on hybrid and battery-operated vehicles from 12.5 per cent to 5 per cent.
“This step, apart from promoting eco-friendly vehicles to reduce pollution in the city, will also bring relief to a large number of entrepreneurs earning their livelihood by plying e-rickshaws,” said a government official.
Government officials said that with the reduction in VAT on hybrid vehicles, a large number of consumers are expected to switch from petrol/diesel vehicles to hybrid vehicles, bringing down vehicular emission.
“Buyers of hybrid vehicles will get tax rebate of lakhs of rupees. By slashing VAT on battery-operated vehicles, it is expected that more players will enter the market, increasing availability and usage of these vehicles,” said the official.
Finance Minister Manish Sisodia had proposed the VAT cuts in the 2016-17 budget. In the current financial year, government officials said, as the new rates come into effect, the VAT on a number of commodities including marble, sweets, namkeens, school bags, footwear and readymade garments has been reduced.
“There will be tax relief, with reduction of VAT on footwear from 12.5 per cent to 5 per cent. Footwear costing below Rs 500 are totally exempted from VAT. Similarly, there is another relief to the consumers, with substantial reduction in VAT from 12.5 per cent to 5 per cent on all kinds of readymade garments. The consumers should expect decline in prices of these commodities immediately,” said a government official.
Officials said people can also expect reduction in the cost of construction of houses as marble will now be cheaper, due to the reduction of VAT. Those buying watches can also look forward to financial savings as the VAT on watches has been reduced from 20 per cent to 12.5 per cent, they said.
With a view to rationalising tax rates, the Delhi government also slashed the VAT on school bags from 12.5 per cent to 5 per cent, officials said.