Date:24/04/2003 URL: http://www.thehindu.com/2003/04/24/stories/2003042403021200.htm

National

VAT on medicines cut

By Our Special Correspondent

NEW DELHI APRIL 23. The empowered committee of State Finance Ministers today decided to soften the "blow" of the proposed value added tax (VAT) by deciding to place medicines in the four per cent duty slab instead of 12.5 per cent as was originally proposed. The increase in VAT duty on medicines was one of the major points of the country-wide agitation launched by chemists recently.

The committee, headed by the West Bengal Finance Minister, Ashim Dasgupta, also decided to place life-saving drugs in the zero duty slab, though the drugs which would be classified accordingly are yet to be identified.

Responding to the traders' point that they would come under the "cumbersome" VAT, the committee decided to enhance the limit for traders under which they can opt out of VAT and pay a composite tax instead. As of now, for traders with an annual turnover between Rs. 5 lakhs and Rs. 25 lakhs, the option is available to pay a one per cent composite tax instead of VAT.

This ceiling is now proposed to be raised to Rs. 40 lakhs.

Thus, while small traders with a turnover of less than Rs. 5 lakhs are exempt from VAT, those with turnovers between Rs. 5 lakhs and Rs. 40 lakhs can now opt out of VAT and instead pay the composite tax.