The Jharkhand cabinet recently decided to reduce the VAT percentage by 50%, which it collects from the medium, small and micro-enterprises. This revised VAT will only be applicable to the products which come out of the MSME sector. This decision by the state government came as a huge relief to the MSME entrepreneurs, as the sector is struggling to even carry on its normal activities.
The state government will now only take 2.5% VAT as opposed to the 5% they used to take earlier. This has been done in order to boost the development of small-scale industries in the state. The price of items such as plywood has been slashed by to 9 percent. Earlier it was 14 percent.
The state government has increased the royalty on items such as sand, bricks and stone dust. This decision will likely increase the cost of construction items, which will eventually increase the cost of the construction in the state.
Even products that have tobacco in them will become costlier, as the Jharkhand state government is all set to increase Value Added Tax on all tobacco products. Earlier the VAT percentage on tobacco products was 20%, but now it is 22% VAT will be charged on all tobacco products.
Apart from revising the VAT rates for MSME sector, the Jharkhand Government also allotted Rs120.30 crores to expand 59.66 km of state road and another Rs 100 crores for the electricity department. Jharkhand’s cabinet also allotted funds to set up 12 judicial services post in the state.
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