The state government has hiked Value Added Tax (VAT) by one per cent on 104 goods ranging from textile goods to paper products from the existing level of 4 to 5 per cent.
Even as the state cabinet passed this decision a week before the budget, it remained silent on the issue of levying entertainment tax on the ongoing Indian Premier League (IPL).
The one percent hike will mop up estimated revenue of Rs 600-700 crore for the state exchequer.
The one per cent hike will be applicable from April 1 and includes raw material items such as drugs, readymade garments, edible oil, utensils, iron and steel goods, non-ferrous metals, IT products, oil seeds, paper, ink, chemicals, sweetmeats, industrial inputs, packing materials.
Officials said that the hike is nominal and unlikely to have a cascading effect and affect the end user. For instance, on paper products or a dairy priced at Rs 80, the additional tax will workout to 80 paisa.
Chief Minister Ashok Chavan defended the decision, saying it did not adversely affect people suffering from price rise.
He said, “The state government has full rights to decide its taxation and increase VAT. We also need to support many development schemes in the coming budget.”
He added, “We are spending Rs 120 crore per month to subsidise essential commodities such as sugar, palm oil and rice to Below Poverty Line (BPL) families.”
However, the state cabinet has kept the proposal to levy 20-25 per cent tax on cricket matches, excluding test cricket to mobilise resources, pending for over a month. Sources said the decision is pending due to pressure from the Nationalist Congress Party (NCP) ministers since their chief Sharad Pawar is not in favour of taxing the Indian Premier League.
Chavan refused to admit that the decision was taking long due to pressure from his allies.
“We are considering it. This IPL season is not the last one. It’s a combined decision and not a personal one,” he said.
Finance Minister Sunil Tatkare had told Hindustan Times earlier, “We feel sports should no be taxed but encouraged. This includes cricket.”