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Odisha hikes VAT by 14.5% on luxury items, 35% on foreign liquor

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Bhubaneswar: The Odisha government today increased VAT on luxury items from 13.5 per cent to 14 5 per cent besides hiking tax on foreign liquor from 25 per cent to 35 per cent. The decision was taken at a Cabinet meeting chaired by Chief Minister Naveen Patnaik here.

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 higher income group, said Chief Secretary A P 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 Odisha was still lower than many states.


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, 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 as high as 15 per cent, Padhi pointed out. “The state is estimated to generate additional resources of Rs 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 Rs 70 crore in the remaining three months of the 2015-16 fiscal,” he 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 other similar potable fermented liquors from 25 per cent to 35 per cent.

“The state is likely to generate an additional Rs 140 crore per annum due to hike in the tax on foreign liquor,” Padhi 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.