VAT increased 1.5% in Rajasthan

Jaipur: Unveiling of the state budget by Rajasthan Chief Minister, Ashok Gehlot has stirred the sentiments of sub-distributors in the region. In the budget, the government has increased VAT on all the products under the bracket of 12.5 to14 percent. IT products that would now be taxed at 14 percent are consumables, multi-functional products, projectors and its accessories and software licenses. Another worry for sub-distributors in Rajasthan is that the VAT on all these products is only four percent in Delhi.

The proximity of Jaipur to Delhi pulls resellers and end customers to buy products from Delhi where

the VAT which is much lower as compared to that in Rajasthan, and this is further going to create an impact on the distribution business in the state.

“The government had already levied 12.5 percent VAT on some of the IT products, which was much high as compared to Delhi. Now, further enhancements in those segment is surely going to create a threat for the sub-distributors in Jaipur, Udaipur and other regions. Because of the price difference, resellers and end customers prefer to buy the products from Delhi, which is close by. This kills the sub-distribution business in the local areas and the government is not realizing this,” commented Manish Aggarwal of Jaipur-based Kanchan Computech.

It is being reported that even the corporate buyers in Rajasthan prefer to purchase products from Delhi instead of the local dealers because of the difference in VAT.

Earlier, vendors like HP had been giving tax benefits to the partners in Rajasthan. But because of the government's decision to further hike the rate and looking at the current market scenario, vendors have refused to provide any further relief.

Rakesh Aggarwal of Krishna Computech, Jaipur, who deals in consumables, added that the hike in VAT in Rajasthan would create an estimated loss of Rs 10 crore per month at the sub-distributor level.

The announcement of increase in VAT has been implemented with immediate effect. However, as the government is itself a potential buyer of IT products in the state, any increment in VAT is going to hit them as well.