The Delhi Budget on Friday proposed a hike in sales tax on diesel from 12 to 20 per cent, doubled the 4 per cent tax on readymade garments costing over Rs 1,000 and slapped a levy of 2-4 per cent on new cars, the new proposals expected to net in an additional Rs 780 crore (Rs 7.80 billion) to Rs 830 crore (Rs 8.30 billion) a year.

The proposals were contained in the Rs 12,780 crore (Rs 127.80 billion) Budget for 2004-05 with a fiscal deficit of Rs 2,359.97 crore (Rs 23.599 billion) presented by Finance Minister A K Walia in the state Assembly. As a result of the increase in sales tax, the price of diesel will go up by Rs 1.50-1.60 when the budget is passed on July 29, Walia said.

Road tax on ad-valorem basis will be imposed at two per cent for private non-commercial vehicles costing up to Rs 400,000 and 4 per cent on those above Rs 400,000.

The government also proposed tax on surgical goods from zero to 8 per cent and imposed four per cent tax on oil cake and deoiled cake.

Walia proposed to exempt from sales tax life-saving drugs for treatment of cancer, AIDS, diabetes, hepatitis, tuberculosis and rabies, glucometer, strips and insulin syringes used by diabetics and hearing aids.

The sale and purchase of used cars, ball pen ink and cotton pillow covers have also been exempted from sales tax.

The tax on mobile phone accessories and aluminium utensils will come down from eight to four per cent, while footwear costing up to Rs 300 will be exempted from sales tax subject to the condition that the price is embossed on the product itself.