VAT has not been charged on consumer goods – Minister

Cabinet Spokesman and Transport, Highways and Mass Media Minister Dr. Bandula Gunawardhana yesterday (January 02) said that legal action should be taken against traders who raise prices on consumer items arbitrarily.

With the recent increase in the Value Added Tax (VAT), effective from January 01, 2024, most of the traders have arbitrarily increased the prices of goods.

These violations will result in legal action being taken against them.

The Minister stated that certain consumer items are subject to 18 percent VAT, while others, having already incurred a 15 percent VAT, would now be applicable for only a three percent VAT.

Minister Gunawardhena yesterday said that VAT is not charged for most of the essential goods.

The Cabinet Spokesperson said this while attending the press conference to inform Cabinet decisions held at the Government Information Department yesterday (2).

He pointed out that the majority of people have no clear idea on VAT. The Minister pointed out that VAT has not been charged on consumer goods such as rice, wheat, wheat flour, baby milk powder, western medicines, local medicines, vegetables, fruits, tea and rubber. He also pointed out that many smugglers have cheated on this and increased the price of the goods.

The Minister who commented further said: “During this week’s Cabinet meeting, a special discussion was held regarding the VAT. Discussions were held with Central Bank Governor Dr. Nandalal Weerasinghe and Finance Ministry Secretary Mahinda Siriwardena. A year ago, the people were under greater pressure. People who lived in apartments were in great difficulty without electricity. We entered into a special agreement with the International Monetary Fund. We have not adjusted the VAT without knowing the pressure of the people.

“Whatever government comes will have to be adhering to these conditions. This has been agreed upon. When the International Monetary Fund comes for its next observation, the first relief will be the VAT amendments to reduce this cost of living,” he said.

(Source: Daily News – By Ishara Mudugamuwa)