In a statement, she said the waiver would come into force from July 1. Hereafter, the VAT would not be levied on domestic cylinders.

Reiterating her criticism of the Union government's decision, Ms. Jayalalithaa said subsequent to the move, the State was to have got Rs. 16 crore additionally a year. With the State government's waiver of the levy of VAT, it would stand to lose totally Rs. 120 crore in a year.

Last week, the Union government hiked the retail prices of diesel by Rs. 3 a litre, kerosene by Rs. 2 a litre and LPG domestic cylinders by Rs. 50 a cylinder.

The Chief Minister stated that she not only condemned the decision to hike the prices but also demanded the withdrawal of the increase. The Union government should have examined the various options and ensured that the prices of petroleum products were not increased. Instead, its act of providing advice to States to reduce VAT was not acceptable.

Frustration

The decision of increasing the price of LPG domestic cylinders by Rs. 50 a cylinder had left women in a state of frustration. What was once used by affluent sections of society was now used increasingly by people of the lower income group.

Ms. Jayalalithaa said that as a result of “maladministration” of the previous Dravida Munnetra Kazhagam regime, every department of the State government was facing a huge loss. At such a juncture, as there was no indication of the Union government's withdrawal of the hike in the petroleum prices, the State government decided to provide relief to the people of the State.

The Chief Minister earlier held a meeting with Ministers and senior government officials to discuss the issue of VAT waiver.

Source : The Hindu, India, dated 29/06/2011