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VAT favoured for CSD canteens Monica Gupta & Devidutta Tripathy / New Delhi April 18, 2005 Empowered panel feels annual defence budget should take subsidy component of canteens into account. The empowered committee of state finance ministers has favoured bringing CSD of the armed forces under the purview of value-added tax (VAT) and said the subsidy component on such canteens, if any, should be borne out of the annual budget of the defence ministry. States have mandated Chairman of the committee Asim Dasgupta, to take up the matter with Defence Minister Pranab Mukherjee if required. "Most of the states have agreed that CSD canteens should continue to be covered under the VAT. The general view in the meeting was that subsidy should be given to CSD, but the subsidy component should be borne out of the defence ministry's budget and not at the cost of state revenues," an official told Business Standard. Items sold in CSD canteens now attract a 12.5 per cent VAT. Punjab and Haryana are, however, of the view that CSD canteens should be kept out of the VAT purview as including them under the new regime will adversely impact ex-servicemen who enjoy the benefits of subsidised products.
