Section 4 of Delhi Value Added Tax Act, 2004 - Rates of Tax

Section 4 of the Delhi Value Added Tax Act, 2004 (DVAT Act) provides the framework for charging VAT on the taxable turnover of a dealer. It refers to specified schedules of goods, special rules for works contracts and the Government's power to reduce rates by notification. The rates appearing in the original legislation must not be treated as the current rate for every commodity: amendments, notifications and the introduction of GST from 1 July 2017 materially affect their application.

Meaning of important terms

Taxable turnover: Under Section 5, the portion of turnover determined under the Act on which VAT is charged. Dealer: a person falling within the definition in Section 2(1)(j). Works contract: the class of agreements described in Section 2(1)(zo), including construction, fabrication, installation, improvement and repair for consideration. Schedules: lists appended to the Act that identify categories of goods; they must be read with subsequent amendments and notifications.

Section 4(1): statutory rate structure

Section 4(1) sets out the following rates in the supplied consolidated historical wording. These are statutory reference rates, not a current commodity-wise rate chart:

Works contracts and declared goods - Section 4(1)(d)

The provision in the supplied text specifies 12.5% on goods involved in execution of works contracts. Its first proviso specifies 5% for declared goods (as defined under the Central Sales Tax Act, 1956) transferred from contractor to contractee in the same form in which the contractor purchased them. The second proviso specifies 5% for works contracts in the nature of printing works. These provisions are relevant to their applicable pre-GST periods and to any surviving assessments or disputes; modern works-contract supplies generally require analysis under GST.

Other goods and packing materials - Section 4(1)(e)

The residual category in the supplied wording carries 12.5%. The proviso provides that packing materials or containers bear the same rate as the goods sold. The residual rate and its scope must be read in light of subsequent legal changes and the GST transition.

Section 4(2): power to reduce rates

Under Section 4(2), the Government may, if it considers it necessary, reduce rates specified in Section 4(1) by notification in the Official Gazette. This is why the bare section by itself cannot establish the rate applicable on a particular sale date. Any operative notification and subsequent amendment must be examined.

Application after the introduction of GST

The Delhi Goods and Services Tax Act, 2017 generally governs intra-State taxable supplies covered by GST. Section 9(1) excludes alcoholic liquor for human consumption from its levy. Section 9(2) provides for GST on petroleum crude, high-speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel only from a date notified on the recommendation of the GST Council. Until the relevant GST levy is brought into effect, applicable VAT and other existing levies remain important for those products. This does not mean every historic DVAT schedule rate remains unchanged.

For example, the Petroleum Planning and Analysis Cell's official VAT/Sales Tax/GST rate table reports state-wise petroleum rates and notes that Delhi VAT on petrol and diesel also applies to dealer commission. Rates can change; verify the relevant effective date rather than applying the old Fourth Schedule figure automatically.

How to verify the applicable Delhi VAT rate

1. Identify the precise commodity and the date of sale.
2. Check whether the transaction is covered by GST or remains within DVAT.
3. Read the relevant DVAT schedule entry, exemption, proviso and all amendments applicable on that date.
4. Check the Government of NCT of Delhi Gazette and departmental notifications for a commodity-specific rate.
5. For legacy transactions, apply the law in force during the relevant tax period rather than today's rate.

Official legislation and reference links

• Department of Trade and Taxes, Government of NCT of Delhi - official department and portal information.
• Delhi Value Added Tax Act, 2004 (official consolidated historical PDF, as on 5 March 2014) - statutory text and amendment footnotes; not a fully current consolidation.
• Delhi Trade and Taxes notifications - check notification type, date and applicability.
• Delhi GST Act and amendments - current GST legislation reference.
• PPAC petroleum VAT rates - official petroleum tax comparison.

Frequently asked questions

Is the 20% rate in Section 4(1)(c) the present VAT rate on all Fourth Schedule goods?

No. The figure is part of the historical statutory text. Actual rates depend on later amendments, rate notifications, the specific product and transaction date.

Does Delhi VAT still apply after GST?

Yes, to specified goods and transactions outside the present GST levy. It also remains relevant for past-period liabilities, assessments, appeals and refunds.

Can the Government change the rates without rewriting Section 4?

Section 4(2) expressly provides a power to reduce the rates by Gazette notification. Other statutory amendments and legally operative notifications must also be considered.

This article explains the statutory framework and does not replace a date-specific review of the Gazette, relevant schedules and applicable notifications.