The government in the Indian capital Delhi has decided to waive removes value added tax (VAT) on fertilizers in order to help farmers cope with rising prices.

Chief Minister Sheila Dikshit said that the government had received representations from farmers requesting for removing of the VAT, which ranged in the range of 5 and 12.5 percent, on fertilizers. While speaking in the aftermath of a Cabinet meeting, she said that she heard that farmers were facing difficulties because of the high tax rates on the fertilizers.

The fertilizers including pesticides, weedicides and insecticides as well as bio-fertilizers and micro-nutrients will not attract any VAT in the territory. According to government data, about Rs. 14,07,619 was collected as VAT on fertilizers in 2009-10 while the figure was Rs. 22,04,513 in 2010-11.

"The VAT on the fertilizers has been removed. This was the demand by the farmers. The government was receiving representations from the farmers requesting substantial relief on VAT being levied on fertilizers," she said.

As a result of the waiving of the tax, the government will incur a revenue loss of about Rs. 33 lakh in 2011-12.