VAT rationalised: Cigarettes to cost more; used cars, tea cheaper

While tea and poor man’s smoke bidi would cost less, processed tobacco and cigarettes would cost more.

This follows the State Government’s decision to rationalise the Value- Added Tax (VAT) structure.

This was cleared by the Cabinet which met here on Wednesday.

The rate of VAT on tobacco has been raised from the present 4 percent to 12.5 while the tax rate on tea has been reduced from 12.5 percent to 4 percent. However, the Centre would no longer impose additional excise duty on tobacco.

Similarly, bidi and handmade soap have been exempted from VAT, so are carts driven by animals.

Other items on which VAT has been reduced from 12.5 to 4 percent are knitting wool, windmill for water pumping and electricity generation, used cars, sugar candy, preserved fruits and vegetables, Glucon C and D, mats of all kinds and rakhi.