Bhubaneswar: Luxury car will be cheaper in Odisha as the state government Saturday slashed the vehicle tax by 50%. Costly cars will now be levied 10% tax instead of 20%.

Effecting an amendment to the Odisha Motor Vehicle Taxation (OMVT) Act, 1975, the tax slabs on personal car have been reduced to three in place of four.

“As per the decision of the Cabinet, car owners will have to pay 6% one-time tax on vehicles costing up to Rs 5 lakh. Similarly, one-time tax of 8% will be levied on cars costing Rs 5 lakh to Rs 10 lakh, 10% tax on cars costing above Rs 10 lakh,” said the chief secretary AP Padhi, while briefing the cabinet decisions.

The present rate is  6%, 8%, 10%, 12% and 20% on cars of costing upto Rs 5 lakh, Rs 5-10 lakh, Rs 10-20 lakh, Rs 20-40 lakh and above Rs 40 lakh respectively, Padhi said.

The decision to bring down the tax rate to 10% on high-end vehicles came following reports that the revenue collections dipped by 75% due to high rate of tax.

“Following the enhancement of the tax slabs, the revenue collection has gone down by about 75 per cent. The luxury vehicle owners are going to other states for registration thereby the ultimate aim of government for enhancing the state’s motor vehicle revenue is being defeated,” said Padhi.

Giving concession to the IT industries, the cabinet revised the lease rental of government-owned IT parks.  The rental charges for core space and incubation space in all designated government-owned IT Towers were reduced to Rs 20 per square feet for super built up area. The relevant provisions of ICT Policy, 2014, will amended to this effect.

The chief secretary said, this has been decided to encourage IT entrepreneurship and startups in the state.

The Cabinet also approved seven other proposals in the meeting here presided over by chief minister Naveen Patnaik.

The cabinet also approved two rural piped water project of Rs.387.59 crore under Basudha scheme for providing drinking water in Puri and Ganjam districts. The state cabinet has approved the lowest tender of GVPR Engineers Ltd, Hyderabad amounting to Rs.387.59 crore for execution of the above work. The work is targeted for completion within a period of 24 months.