In an end-of-the-year decision, state govt announces a hike in VAT on goods and liquor, expecting to rake in an extra Rs 420 crore per annum
Post News Network
Bhubaneswar: The state government Thursday decided to hike Value Added Tax (VAT) on luxury items from 13.5 per cent to 14.5 per cent, along with a hefty hike of 10 per cent on foreign liquor, taking it up to 35 per cent.
The hikes are expected to generate an additional revenue of Rs 420 crore per annum.
A decision in this regard was taken by Chief Minister Naveen Patnaik at a cabinet meeting held Thursday.
The items on which VAT rate would be 14.5 per cent include luxury items like televisions, refrigerators, air-conditioners, washing machines, air coolers, two-wheelers and four-wheelers used by families with high, said Chief Secretary AP Padhi.
As the Goods and Service Tax (GST) rate would be about 15-16 per cent, the Centre has already enhanced Service Tax rate from 12.36 per cent to 14.5 per cent in the Finance Act, 2015-16, Padhi pointed out, adding that the 14.5 per cent VAT on luxury items in the state was still lower than many states.
While Andhra Pradesh, Telangana and West Bengal havse 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, he said.
Karnataka, Rajasthan, Tamil Nadu, Kerala and Punjab have increased the tax rate to 14.5 per cent. The tax rate in Gujarat was 15 per cent, Padhi pointed out.
“The state is estimated to generate additional resources of `280 crore per annum due to hike in VAT on luxury items by one per cent. The state will get an additional amount of about `70 crore in the remaining three months of the 2015-16 fiscal,” Padhi said.
Similarly, the Cabinet also approved a proposal to hike tax rate on foreign liquor whether made in India or not, including brandy, whisky, vodka, gin, rum, liquor, cordials, bitters and wine or mixture containing any of these, as also beer, ale, porter, cider, perry and similar potable fermented liquors from 25 to 35 per cent.
“The state will generate an additional `140 crore per annum due to hike in tax on foreign liquor,” Padhi said. “Hike of tax on liquor is for 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 Upadhyaya Gram Jyoti Yojana and exemption of inspection fees on electrical installations, the Chief Secretary said.
