The Odisha government is going to put in place a mechanism to adjust the sales tax on petroleum products, keeping in view the international price of the crude oil.
The state government has empowered the finance department to set up a committee to study crude oil prices and fix the sales tax accordingly, as and when required, with the approval of the chief minister.
“Since the state is levying sales tax on petroleum products, the state is suffering huge revenue losses due to the fall in the prices of petroleum products in recent times”, said state chief secretary A P Padhi, adding that the loss this fiscal would be to the tune of R417 crore.
He said with the empowerment of the finance department to fix the rates, it would now be easier to increase or decrease the sales tax rate on petroleum product taking into consideration the fall and rise in the prices, respectively.
The state now levies 20% sales tax on retail petroleum products, under Schedule C of the Odisha VAT Act, which has a provision to collect taxes on selected items at a single point on total sale value.
The state government on Thursday enhanced the value added tax (VAT) on goods under Part-III of Schedule B from 13.5% to 14.5%, expecting to generate an additional revenue of Rs 280 crore per annum. The government aims to generate additional revenue of R70 crore in this financial year.
The increased VAT will be imposed on plant machinery, equipment, commercial vehicles, buses, trucks, four-wheelers, two-wheelers, refrigerators, air conditioners, televisions, cement, soaps, detergents, creams and lubricants.
It has also levied 10% surcharge on the sale of foreign liquor to mop up an additional revenue of about Rs 140 crore per annum. From 25%, the tax would now be 35% on foreign liquor whether made in India or not, including brandy, whisky, vodka, gin, rum, liquor, cordials, bitters and wines or a mixture containing any of these, as also beer.