What is the rate of VAT?
Under the VAT, the tax rates have been simplified. There are only two main rates of VAT: (1)4% for items consisting mainly of raw materials used in the manufacturing process, IT products and some goods of common consumption (2)12.5% for all goods unless they are listed under the other rates Foodgrains including pulses, milk, vegetables and books are not subject to VAT. In addition, there are two other rates for specific items: (1)1% for gold, silver, other precious metals, precious and semi precious stones and their jewellery (2)20% for liquor The only exception to these rates is for the sale of motor spirits, which have special tax rates based on the existing Bombay Sales of Motor Spirit Taxation Act, 1958, subject to a floor rate of 20%.
