Bhubaneswar: High-end cars and SUVs are set to become cheaper in the state with the cabinet on Saturday deciding to reduce the tax slab for such luxury vehicles.

The cabinet chaired by chief minister Naveen Patnaik decided that there would be just three tax slabs for such vehicles now instead of five.

Chief secretary A.P. Padhi said: "It has been seen that due to the enhancement of tax, the sale of high-end vehicles has gone down. The consumers are going to other states for registration of vehicles, thereby the ultimate objective of the government of augmenting motor vehicle revenue is being defeated."

He said: "The state cabinet has decided to reduce the tax slab structure."

In a press brief, the government said: "The Odisha Motor Vehicle Taxation Act, 1975, was last amended and came into force with effect from November 21, 2017 with certain changes in the tax structure. After the amendment, the one-time tax of personal vehicles, which was previously fixed at 5 per cent of the car's cost, was enhanced and fixed at graded rates of 6, 8, 10, 12 and 20 per cent depending on the vehicles' cost. As the sale of the costlier vehicles has gone down in the state, the government has proposed to reduce the tax slabs and limit it to 6, 8 and 10 per cent according to the powers conferred under Section 15 of the act."

A consumer will have to pay 6 per cent tax for purchasing a vehicle costing within Rs 5 lakh.

One buying a vehicle worth between Rs 5 lakh and Rs 10 lakh will have to pay 8 per cent tax, while 10 per cent tax will be levied on vehicles costing above Rs 10 lakh.

The government on Saturday also gave some relief to bus owners.

"The tax for standing passengers of a stage carriage was earlier at a flat rate of Rs 152 per annum per passenger. In the last amendment, the rate of tax per standing passenger was fixed at the rate of 50 per cent of the tax payable for sitting passenger, but it was observed that no one agreed to travel as the standing passengers are paying such high fee. The government has, therefore, decided to reduce the above from 50 per cent to 25 per cent," said the release.

In another major decision, the cabinet decided to encourage the start-ups by giving them space in the IT Towers at an affordable rate.

The state cabinet also approved two rural pied water supply projects in Puri and Ganjam districts worth of Rs 387.59 crore.