The Uttar Pradesh government today reduced Value Added Tax (VAT) on several items of common use, besides announcing a scheme to benefit tax defaulters.

VAT has been reduced from 12.5 per cent to 4 per cent on motorised and non-motorised three-wheelers used by physically challenged, bicycle, tricycle and 10 horsepower (HP) diesel engine.

A state cabinet meeting chaired by chief minister Mayawati approved the proposal. The state government has sought to rationalise the tax structure in Uttar Pradesh for the benefit of various sections of society, including farmers, common man and traders, cabinet secretary Shashank Shekhar Singh said briefing the media here this evening.

Although, VAT rates have been reduced, the government expects tax revenue to increase by Rs 212 crore with its decision.

The settlement scheme for small-time traders with annual turnover of up to Rs 50 lakh has been simplified and now they could avail of the scheme round the year.

Besides, traders holding valid registration would be given an insurance cover of Rs 4 lakh.

Now, the 5 per cent tax on the sale of second hand vehicles have been recast as Rs 3,000 and Rs 5,000 flat tax for vehicles up to 1,000 cc and of higher capacity, respectively.

All the forms required by traders for paying tax would be available online, he informed.

Traders have been given time between May 1 to July 31 for resolution of their tax dues. The assessment system for cable television networks and water/entertainment parks has been rationalised for onetime resolution.

For outstanding tax dues, the penalty would be waived and 50 per cent rebate would be given on the interest amount. These decisions have been taken after discussions with the respective traders associations to their satisfaction, Singh said.