Increase in Value Added Tax

Recently, the state government has increased the Value Added Tax (VAT) rate from 12.5 per cent to 14.5 percent quoting recession as a main reason.

According to the state government’s order (G.O.35), goods taxable under Schedule-V of the VAT Act at 12.5 per cent would now be taxed more.

This hike would increase the prices of the daily use commodities such as ghee, butter, biscuits, chocolates, soaps, detergents, toothpaste, confectioneries, soft drinks, processed food, and cosmetics.

Construction industry is also supposed to suffer because commodities such as cement, tiles, marbles, plywood and sanitary ware come under this category. Electrical and electronic goods such as televisions and refrigerators are expected to be more costly. This hike would also impact the prices of automobiles, spares, tyres and lubricants.