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Prior to the levy of Value Added Tax (VAT), Army canteens had full exemption from sales tax or were levied concessional rates of sales tax. The levy of VAT has imposed a tax on Army canteens even where exemptions in sales tax were given or concessional rates of sales tax applied. As a result, the prices of most commodities in the Army canteens have increased due to the levy of the Value Added Tax (VAT).
The Government had taken up the issue of levy of VAT with the Empowered Committee of State Finance Ministers. However, the Empowered Committee has decided that there is no justification to give VAT exemption on sales for the Canteen Stores Department.
This information was given by the Defence Minister Shri Pranab Mukherjee in a written reply to Shri Pramod Mahajan and Shri C Perumal in Rajya Sabha today.
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