Thursday, May 27, 2010

OC Requested Exemption on VAT and Road Tax for 2000 cars to be procured for Games Duties

Delhi government’s Commonwealth Games tab seems to be constantly on the rise.

Commonwealth Games Organizing Committee (OC) chairman Suresh Kalmadi has now written to the city government asking for a value added tax (VAT) and road tax exemption for the 2,000 cars that OC is planning to procure for Games duties. The total tab, according to rough estimates, is likely to come to around Rs 30-40 crore not a small amount for a government, which for the first time is experiencing financial constraints and this year, has a cash reserve of just about Rs 200 crore.

Confirming the receipt of the letter, a senior Delhi government official said that the companies with which OC is in talks for these cars are Maruti, Tata and Mahindra. Late on Wednesday night, a meeting was held in which it was decided that the government is ready to give the exemption with the clause that when the vehicles are sold off after the Games, VAT and road tax will have to be paid on the original buying amount. ‘‘We are in the process of drafting the letter and will soon send it to the OC,’’ said an official.

Incidentally, Delhi government’s new rates of road tax are expected to come into force from June 1 and in it the rates have been substantially hiked for bigger cars. This may further raise the tab for the Games vehicles exemption if it is granted.

Delhi government, apart from its expenses on the many infrastructure projects and stadia in the capital which are being constructed/redeveloped for the Games, has several other Games bills to foot. It is going to pick up the tab for the use of DTC’s low floor buses for Games delegates and will also reimburse the corporation the cost of the common tickets for the Games. As per the agreement reached, every Games ticket will come with a free DTC bus or Metro ride to and from the venue. DMRC has told the government that it will not need reimbursement but there is reluctance in the government to saddle the already cash-strapped DTC any further.

The OC had earlier requested for a VAT exemption on the sports equipment that they are buying but no decision has been reached on that yet. The matter, say senior officials, is still under consideration. An exemption has also be granted on luxury tax.