Prices of luxury commodities, including electronic goods and two-wheelers, are set to go up in Odisha, with the State Cabinet on Thursday approved a proposal to hike VAT rate from 13.5 per cent to 14.5 per cent.
Chief Minister Naveen Patnaik-chaired Cabinet meeting gave its consent on VAT hike explaining that other States had also increased the tax. The decision to hike VAT will help the State government garner Rs.280 crore.
Besides, the Cabinet also gave go-ahead to proposal of increase in VAT on all foreign liquor from 25 to 35 per cent. The government will be able get Rs.140 crore from this.
Chief Secretary A. P. Padhi said ahead of proposed introduction of GST, which would be in the range of 15 per cent to 16 per cent, the decision of upward revision of VAT on luxury items was taken.
Besides, the Cabinet decided to authorise the finance department to enhance VAT rate on petrol and diesel after obtaining permission from the Chief Minister.
Due to gradual fall in crude oil price and declining trend of same in the country, the VAT and entry tax collection were adversely, he said.
While Andhra Pradesh, Telangana and West Bengal have increased tax rate from 13.5 per cent to 14.5 per cent, Madhya Pradesh, Chattishgarh and Jharkhand have also made the tax provision at 14 per cent, Mr. Padhi said.
Karnataka, Rajasthan, Tamil Nadu, Kerala and Punjab have increased the tax rate to 14.5 per cent. The tax rate in Gujarat was as high as 15 per cent, Mr. Padhi pointed out.
“The State will get an additional amount of about Rs.70 crore in the remaining three months of the 2015-16 fiscal,” he said.
“Hike of tax on liquor is for larger social benefits,” he added.
In another decision, the Cabinet decided to exempt tax like VAT and entry tax on procurement of materials being used under Deen Dayal Upadhaya Gram Jyoti Yojana and exemption of inspection fees on electrical installation, the Chief Secretary said.
The decision will help the State government garner Rs.280 crore