Chandigarh, April 25
The Haryana Cabinet, which met under the chairmanship of the Chief Minister, Mr Bhupinder Singh Hooda, here today, took major decisions regarding the implementation of value added tax (VAT) in the state.

Briefing newsmen Mr Hooda said the state would not increase tax on diesel from the existing 12 per cent to 20 per cent as agreed by states at the Empowered Committee on VAT.

Only today the secretary of the committee, Mr Ramesh Chandra, said in Delhi that all states had agreed to impose 20 per cent tax on diesel. The committee is scheduled to meet in Delhi tomorrow.

Mr Hooda said Haryana would convey its decision to the committee tomorrow.

In a major concession to defence personnel, Mr Hooda said all sales made by CSD canteens were exempt from tax. Similarly, no tax would be imposed on fertilisers and gypsum.

The Cabinet decided to reduce the rate of tax on drugs and medicines from 10 per cent to 4 per cent under the Haryana Value Added Tax Act, 2003, with effect from April 1, 2005.

He said as a special gesture to schoolchildren, exercise books, lead pencils, drawing books, etc, would also be exempt from tax. Similarly, common salt, including branded and processed, would be exempt from tax.

The rate of tax on kerosene sold through the PDS, paper, sports goods, tractor parts, telephones, sewing machines, coir and coir products(except mattresses) and bitumen would also be 4 per cent.

The tax on notified raw materials and packing materials used by industrial units would be reduced to 4 per cent and they would not have to furnish declarations.

Dealers with a turnover of up to Rs 5 lakh would be exempt from VAT. This, he said, would cover village artisans and cottage industry. Second-hand cars would attract tax at the rate of 4 per cent.