The Hindu Business Line : Haryana matches Delhi, pegs VAT rate on automotive tyres at 12.5 pc

IN yet another instance where tax rate variations among States is set to be resolved, Haryana has decided to peg the VAT rate on automotive tyres at 12.5 per cent as against the existing 8 per cent. This move would ensure parity between Delhi and Haryana VAT rates on this category of product.

Delhi had from April 1 adopted a VAT rate of 12.5 per cent for automotive tyres. Recently, Delhi had lowered its tax rate on diesel to 12.5 per cent to bring it in line with the rate adopted by Haryana.

Informed sources said that the Haryana Government has issued a draft amendment notification that seeks to, among other things, peg the VAT rate on automotive tyres at 12.5 per cent. This notification is likely to come into effect from May 14.

Tyre dealers in the Capital are somewhat relieved over this development. Faced with loss of trade, dealers in Delhi had made representations to the Empowered Committee of State Finance Ministers on VAT and the Governments of Delhi and Haryana.

"Although the 12.5 per cent rate is likely to come into effect in Haryana from May 14, it would take another 10-15 days before real parity can be restored between the dealers of Haryana and Delhi. Dealers in Haryana would make the best of the sales opportunity provided by the lower VAT up to May 14," Mr S.P. Singh, Convenor, All-India Tyre Dealers Federation, told Business Line here.

Tyre manufacturers too are understood to be making the most of this "window of opportunity" presented by the disparity in VAT rates on automotive tyres between Delhi and Haryana. They continue to "stock heavily" in Haryana rather than Delhi, industry sources said.

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