Orissa has decided to rationalise its Value Added Tax (VAT) structure, a move that is expected to bring down the tax on some products at par with the tax rates of other states.
The VAT advisory committee headed by the state finance minister has decided to reduce the rate for products like structural steel and plywood. Presently, the VAT rate on these items is 12.5 per cent compared to four per cent in other states, said a senior official of state finance department.
He said rules are being framed under Orissa Sales Tax (Settlement of Arrears) Act 2011. Once the rules are framed, dealers in the state will be educated through workshops.
The finance department also plans to introduce e-refunds. According to this facility, if the dealers have paid surplus tax, they can get it back. It has been decided to set up help desks in all sales tax circle offices to provide e-services to small dealers. Asked if the base rate of VAT in the state will be hiked, the official said, no decision has been taken yet.
The Hota committee, an expert committee formed by the state government to suggest revenue enhancement measures, had recommended hike in base VAT rate in the state from four per cent to five per cent.