Heeding Finance Minister P. Chidambaram's plea to state governments earlier this week, the Delhi government Saturday rolled back the value added tax (VAT) imposed on products sold in defence canteens.

The imposition of VAT a month ago on items sold through defence Canteen Stores Department (CSD) had brought product prices on par with goods sold in the market, depriving defence personnel of a privilege in practice for decades.

At a cabinet meeting, Chief Minister Sheila Dikshit also decided to lower the VAT duty rates on several capital goods to provide relief to the manufacturing and export industry.

According to a government statement, the tax rates on 48 items on the list of industrial inputs would now be only four percent. Similarly, the rate on 29 capital goods would also attract a four percent VAT.

"Khadi garments, seeds other than oilseeds and jaggery, items covered under the public distribution system (PDS) except kerosene and papad, and items under customs bond for re-export after manufacturing or otherwise are also exempted from VAT," the statement said.