VAT exemption on foodgrain: UT to approach Centre

The Chandigarh administration is considering approaching the Centre for exemption of 4% Value Added Tax (VAT) on foodgrain items.

Following repeated representations from Chandigarh Beopar Mandal and Confederation of Indian Industries (CII), Chandigarh, the UT administration has moved a proposal in this context and plans to forward it to the Ministry of Home Affairs (MHA) for approval.

A senior official told TOC that the trading community in the city has been requesting exemption of VAT on foodgrain items since on grounds that it is a non-producing state. Besides, he added, VAT on foodgrain items has already been exempted in Delhi and seven other states.

"In fact, they have been following the Punjab VAT rules here in Chandigarh. But then Punjab is a major wheat and paddy producing state," he said. "Now, we have decided on two things.

To recommend complete exemption of VAT on foodgrain items and to study the pattern in states like Kerala to reach a consensus before the city abolishes VAT on wheat and paddy."

Being a non-producing state, added Chandigarh Beopar Mandal general secretary Diwakar Sahoonja, traders buy wheat and paddy from other states and have to pay 4% extra in Central Excise Tax.

"This means, that apart from 4% VAT, they (Chandigarh traders) have to shell out a similar amount in the form of VAT, which is unfair.

The same is the case with other items where the trading community has to shell out VAT between 4-12.5% apart from the mandatory 4% CST," disclosed Sahoonja.