Follow Us
Ruchika M Khanna
Tribune News Service
Chandigarh, May 28
With just a month to go for the rollout of the goods and services tax (GST), the Punjab Government has gone in a tizzy to frame the rules for the State Goods and Services Tax Act and assess if it can save taxes worth Rs 2,800 crore from being subsumed.
Confusion still prevails in regarding various state taxes and levies that are to be subsumed as the GST rolls out on July 1.
Though Punjab appears to be better placed after the one-nation, one-tax law, with the state assured of a 14 per cent year-on-year hike in total central devolution of taxes for the next five years, the government is in a quandary on whether it would lose Rs 1,100 crore per annum it collects as infrastructure cess, Rs 800 crore rural development fee and Rs 900 crore mandi fee.
Sources in the Finance Department said with the devolution of taxes to the state being based on the financial year 2015-16 when VAT was Rs 17,000 crore, the state will get Rs 2,380 crore as additional devolution over Rs 17,000 crore in 2017-18.
Since the 14 per cent hike is compoundable, the next fiscal will see the devolution jump from Rs 2,380 crore to Rs 2,713 crore and states revenue will increase from Rs 19,380 crore this fiscal (2017-18) to Rs 22,100 crore in the next fiscal (2018-19). Also, the devolution would also increase as the state gets more taxes from service tax devolution and from the consumption of coal for power generation as tax on coal, among others.
While infrastructure cess on foodgrain (3 per cent) goes to one of the few cash rich bodies, Punjab Infrastructure Development Board, the latter stands to lose Rs 1,100 crore per annum of this is subsumed. It will, however, keep on getting Rs 1,400 crore infrastructure cess levied on petrol (at the rate of Rs 2 per litre) diesel (Re 1 per litre) electricity (Rs 5 on every Rs 100 worth of power consumed) and on purchase of immovable property (Re 1 for every Rs 100 in property transactions).
However, with the PIDB having been “milked” by the previous government to raise a loan of Rs 3,134 crore and its income pledged for debt servicing, almost the entire Rs 1,400 crore earning could go towards servicing the debt. In case there is a shortfall in collections, the state, which is a guarantor for the loan, will have to service the debt.
Meeting tomorrow
Officials of the Finance Department and the CM’s Office will meet on Tuesday to assess the taxes that will be subsumed and how it will impact the state’s already critical fiscal health. With a decision having been taken regarding a zero tax rate on foodgrain, mandi fees and rural development charges could actually go
2
3
4
6