Finance Minister P. Chidambaram Monday urged states to exempt the canteen stores department (CSD) of the armed forces, which sell essential and other items of daily use, from the new Value-Added Tax (VAT) regime.


"If I have my way, I would use my persuasion skills to urge states to exempt CSD canteens from VAT. Every political party too must persuade its party-ruled state to exempt canteens from VAT," he said, replying to the discussion on the finance bill 2005-06.

CSD canteens sell items ranging from matchboxes to cars to armed forces personnel at concessional rates.

Though some states levied sales tax on CSD canteens before the introduction of VAT, Chidambaram said irrespective of the tax policy that prevailed before VAT, states should exempt canteens from VAT, which was introduced last month in 21 states.

"All soldiers will be thankful to us," he remarked.

Prices of items sold through the CSD canteens have shot up by at least 10 percent since VAT was imposed.