The state government is likely to include sugar and textiles under the 4 per cent value added tax (VAT) slab, official sources said.

Sugar and textiles were so far exempted from VAT at the state level on the ground that they were under the list of additional excise duty (AED) levied by the central government. But from April 1, 2011, the central government had removed both the items from the list of items being levied additional central excise duty.

The Union government used to levy AED of Rs 71 per quintal on sugar plus Rs 14 as additional cess. The AED revenue goes to the state governments. The removal of sugar and textiles had created apprehension among the sugar and textile industry that they may become liable for VAT at the rate that is applicable to goods which were not specified under any schedule of VAT. Goods which are not specified are liable for VAT of 14.5 per cent.