AAP slashes VAT rates, avoids new taxes in Delhi budget

Delhi's deputy chief minister Manish Sisodia presented a 'zero tax budget' on Monday which also aimed at rationalising Delhi's Value Added Tax (VAT) structure. The budget implies cheaper sweets, snacks, watches, readymade garments, shoes and school bags, among other things, as the government continues to focus on education, health and transport.

Sisodia, who also holds the finance portfolio, presented a Rs46,600 crore annual budget, with plan expenditure at Rs20,600 crore, of which Rs4,645 crore (23 per cent) was allocated to education, Rs3,943 crore (19 per cent) to transport and Rs3,200 crore (15 per cent) to health.

The Aam Admi Party government's second budget aims to slash VAT rates on several items this year in an attempt bid to widen the tax net in Delhi. The decision to slash VAT rates on at least eight items raised eyebrows, considering that 65 per cent of Delhi government's revenue for development stems from VAT collections.

In his budget speech, Sisodia said his taxation proposals were founded on four principles - maintaining the distributive character of Delhi's trade, simplification of the existing system and promoting ease of doing business, simplifying the structure to avoid manipulation and keeping a uniform rate with neighbouring states.

While the government initiated the demolition of south Delhi's BRT corridor built by the erstwhile Congress administration, Sisodia announced that the government will construct two elevated BRT (bus and rail transport) corridors for east-west and north-south connectivity.

In his budget speech, Sisodia announced that a 29-km east-west elevated BRT corridor will be built from Anand Vihar Terminal to Peeragarhi and a 24-km north-south elevated BRT corridor will stretch from Wazirabad to the airport.

The education sector once again received majority of the funds in this year's budget, with Sisodia proposing a total expenditure of Rs10,690 crore. This is 22.55 per cent of the total budget and an increase of 8.68 per cent from last year.

While the previous budget focused on development of quality infrastructure, improvement in quality of learning is the main focus area this year. For this, the government has given a boost to skill development and teacher training.

Reiterating its focus on healthcare and ensuring that medical facilities are easily accessible to all, the Delhi government has allocated Rs5,259 crore to the sector in the 2016-17 budget. This marks a jump of nearly 10 per cent from last year.

The three-tier strategy adopted by the government focuses on setting up 1,000 mohalla clinics and 150 polyclinics across the capital in the next one year - a move aimed at bringing primary healthcare to the ''doorstep of citizens''.

Two weeks before the second phase of its flagship odd-even scheme kicks off, the AAP government allocated a major portion of budget funds to transport and road infrastructure, to encourage measures to curb pollution in Delhi and decongest its roads.

''I propose a plan outlay of Rs1,735 crore for enhancement of public transport, which is 8.4 per cent of the total plan outlay in 2016-17 and Rs2,208 crore for road infrastructure, which is 11 per cent of the total plan outlay in 2016-17,'' said Finance Minister Sisodia.