Bhubaneswar: For the people of Odisha, luxury items like TV, fridge, air-conditioner, washing machine, car etc will be costlier as a decision to this effect was taken by the State Cabinet in a meeting presided over by chief minister Naveen Patnaik at the State Secretariat here on Thursday.
“The State Cabinet decided to impose one percent more Value Added Tax (VAT) on these luxury items. The state government which had earlier imposed 13.5 percent VAT on these items, will now charge 14.5 percent VAT on these items,” chief secretary AP Padhi told mediapersons after the meeting.
He said the government has taken a decision in this regard after considering the collection of VAT by the neighbouring states at present. With the enhanced VAT, the state government will have additional revenue collection of Rs 280 crore with around Rs 70 crore in this fiscal.
Additional chief secretary, Finance, R Balakrishnan, present at the media briefing, said there would be 10 percent additional VAT on foreign liquor, whether made in India or not and all Indian Made Foreign Liquor (IMFL).
“With this, VAT collection on liquor would be 35 percent as against 25 percent collected by the state government earlier. With the additional VAT, the state government will have a collection of extra revenue of Rs 140 crore per year,” he added.
“As the Government of India has also taken some advantage of this by increasing additional excise duty, cess and other duties on these two items, we also want to take advantage on this. As a matter of policy, we have introduced this change,” the chief secretary said.
Stating that there is no decision on additional VAT on petrol and diesel, Padhi said the state government has sustained a loss of Rs 417 crore on VAT and Entry Tax in a year due to frequent rise and fall in the price of these two products.
“Keeping this in view, the state government has decided to empower the Finance department to find ways for more revenue collection from these petroleum products,” he added.
It may be mentioned that the state government had increased VAT on petrol and diesel twice from 18 to 20 percent in June and from 20 to 23 percent in December last year.