AAP government presents a zero tax budget, slashes VAT

The Arvind Kejriwal-led Aam Aadmi Party (AAP) government on Monday presented a “zero-tax” Budget which slashed the value added tax (VAT) on a wide range of goods to bring down prices of consumer products such as readymade garments. It was increased the outlay in the annual Budget for Delhi to Rs 46,600 crore for 2016-17, which represents a Rs 8,850 crore increase over the corresponding figure of the previous year without levying any fresh taxes which is referred to as a “zero-tax” Budget.

Deputy Chief Minister of Delhi, Manish Sisodia, who is also the Finance Minister, claimed that the Delhi government has registered a growth of 17 percent in 2015-16 due to transparency and honest governance and the lower VAT would increase tax collections due to the rise in voluntary compliance.

Sisodia said that the move to simplify VAT by introducing a uniform rate was taken to rationalize tax rates with neighbouring Haryana and Uttar Pradesh.

It was also proposed to simplify the tax on textile and fabric which is now covered under several entries in the tax rate schedules, which means some are exempted from taxes while other are taxed at the 5 percent rate.

Sisodia said that he propose to simplify this system by levying a uniform tax rate of 5 percent on all variety of textiles and fabrics (including sarees) except khadi and handloom fabrics.

Kejriwal said that Delhi’s Budget is model for all the other states.

He further said that they have not increased burden on the aam admi but have worked on decreasing the tax rates. Still, they expect to generate more revenue in coming year as he trust people of Delhi will help them in achieving it.

This Budget is their commitment to fulfill election manifesto, Kejriwal denied that the populist Budget was to woo voters for municipal election in Delhi or in Punjab, where Assembly elections are scheduled in 2017.