Expert panel pitches for raising base VAT rate to five per cent

An expert committee constituted by the Orissa government to broaden the state's revenue base, has recommended the state government to hike the base rate of Value Added Tax (VAT) from four to five per cent, create a separate wing for professional tax administration and fix higher rate for industrial water during drought years.

In the mining sector, the committee has suggested that at least Rs 1000 per hectare per annum be fixed as the surface rent for land not accessible to land revenue with respect to major minerals. Moreover, it has also stated that in the future, all mines of important minerals should be recommended and leased out only in favour of Orissa Mining Corporation (OMC).

"The expert committee has made many recommendations including raising the lower rate of VAT from four to five per cent. Other states have already raised the base rate of VAT. We will hold discussions with different stakeholders and then with the state Chief Minister before arriving at any decision”, state finance minister Prafulla C Ghadai told reporters here.

Asked on reduction on taxes on petroleum products, Ghadai said, it is the Central government that needs to cut taxes on such products.

The committee headed by Sanjib Chandra Hota, said that the state should get prepared for the eventual introduction of the proposed Goods & Service Tax (GST).

On professional tax, the committee is in favour of a separate wing for professional tax administration under an Additional Commissioner. A legal requirement of furnishing an annual return has to be imposed on all employers.