The newly elected Jayalalithaa government has suddenly hiked various taxes on articles and goods.
Beginning Tuesday, a host of electronic goods, including iPhones, iPods, mobile phones, LCD/LED panels and DVDs/CDs, will cost more as the local taxes have been raised from 4% to 14%.
Besides these, tobacco products and textiles will also cost more, with the government deciding to increase taxes to generate additional revenue of Rs 3,900 crore. These tax changes come into effect from July 12, 2011.
In an official release on Monday, the government said the revision of sales tax had been identified as one of the possible sources of increasing revenue. Accordingly, it issued a notification to make certain changes in sales tax rates.
The Value Added Tax (VAT) on commodities, now charged at 4%, has been increased to 5%. Justifying its decision to increase the tax, the government said states like Karnataka, Maharashtra and Gujarat had increased this to 5%. However, keeping in view the importance of the farm sector, agricultural implements, which at present are taxed at 4%, would be fully exempt by including this entry under the fourth schedule.
Similarly, fertilizers and insecticides under 17A of the first schedule, taxed at present at 4%, will also be fully exempt.