Good news! Low-cost footwear, school bags to remain VAT free

New Delhi: Following protests from several MLAs, the Delhi government has decided to roll back the hike in VAT on low-cost footwear and textiles which was proposed in its Budget 2016-17.

Deputy Chief Minister Manish Sisodia, in his Budget speech on Monday, had proposed a VAT of 5 percent on all textiles and shoes priced at below Rs 500, triggering protests from several AAP MLAs, including Madan Lal, Alka Lamba and Vishesh Ravi, and BJP's Vijender Gupta.

"The Delhi government has decided to roll back the proposed hike in VAT on textiles and low-cost footwear," sources said.

Sisodia had proposed rationalisation of tax on textiles and fabrics by applying uniform tax of 5 percent on all varieties, including sarees except khadi and handloom.

"At present, footwear costing above Rs 500 and school bags costing above Rs 300 are taxable at 12.5 percent. It is proposed to apply uniform VAT rate of 5 percent on all kinds of footwear and school bags irrespective of their price," he had said.

Terming the levy of five percent VAT as an "onslaught on common man", Gupta had yesterday warned the Delhi government that if this tax proposal is not withdrawn, he would launch a state-wide agitation against it.