Chandigarh, January 12
Junk food-lovers, here’s a hike that’s likely to leave a bad taste in your mouth and burn a hole in your pocket. All non-diet foods — junk food in the common man’s jargon — are all set to cost more in Haryana with the department of excise and taxation proposing to double the Value Added Tax (VAT) on all such food items and drinks
In view of the budget shake-up brought about by the economic meltdown, this department has forwarded this tax proposal, along with a couple of others, to the Haryana government. This proposed hike in taxes will be tabled at the Cabinet meeting slated later this month before the budget session gets under way on February 2 for approval.
Sources said that the department has decided to impose a kind of an “obesity tax” by hiking the rate of VAT in the state on eatables and drinks which have little or no nutritional content. From the existing 12.5 percent VAT on all such items, the department has increased the same to 25 per cent.
To be implemented as soon as the Cabinet gives its nod, non-diet soft drinks, sandwiches, burgers, pizzas, footlongs, sizzlers, ice-creams, artificially flavoured drinks and other fattening products, high on calories, will become dearer by the end of the month. However, milk and its products and real fruit juices have been kept out of this hike.
This hike, once effected, will double the department’s revenue from this source and the income of Rs 10.15 crore collected in the year 2007-08 will go up to over Rs 20 crore in this financial year.
VAT is likely to be hiked by the department on a few other items to tide over the financial crisis and generate additional income by exploring “out-of-the box” options.
Sources said that a VAT hike on items was in the pipeline on similar lines and would be put before the Cabinet for approval. These would essentially include benefits being extended to the private sector by virtue of these being covered under one head along with the government undertakings. The VAT is likely to be raised from 4 per cent to 12.5 per cent in this sector for the private players by segregating them to add to the revenue generation.
