The proposal of not levying any value-added tax (VAT) on sugar and khandsari (brown sugar or cottage sugar) in Tuesday's budget has drawn mixed reactions from stakeholders.
The union budget 2011 proposed to allow states to impose tax on sugar and textiles with a proposal to amend the Additional Duties of Excise (goods of special importance) Act 1957, which removes sugar and textiles from the Act's schedule.
"I intend to give relief to the people of Delhi by maintaining status quo in respect of khandsari (brown sugar or cottage sugar), sugar and textiles by keeping them in the exempt list," Delhi chief minister Sheila Dikshit announced during presentation of the state budget here today.
The state government had already exempted imported sugar from VAT last year and now if there is no VAT on domestic sugar, it means sugar would be cheaper in Delhi.
"This is good for aam janta. We were fed up with the rising cost of everything. If we have to pay less for sugar, it is a small relief," said Dolan Ray, a housewife from Mayur Vihar.
No added tax on sugar will also help cold drink makers, mithai walahs and confectioners, even as the budget proposes to increase VAT from 5% to 12.5% on sweets (and namkins).
Calling it a political statement, Praveen Khandelwal, general secretary of Confederation of All India Traders (CAIT) said, "She (Dikshit) is not saying anything new. It was the decision of the 'Empowered Committee of State Finance Ministers' last year." But all these would be temporary measures as the union finance minister introduced a nationwide GST Bill in Parliament on Tuesday.