State govt approves increase in VAT on luxury items

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Bhubaneswar, Jan 2: 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.

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