Punjab may hike VAT, impose new taxes to end deficit

Perturbed over the low VAT collection, the Punjab government may introduce new taxes or increase the existing VAT rate in the forthcoming cabinet meeting.

The tax collection from stamp duty during the first quarter has gone down and even the VAT collection figures have not been encouraging.

The state government is witnessing a deficit of Rs 700-800 crore in its annual plan which can be increased by new taxes or by increasing the existing ones to meet the deficit.

When asked about plans to introduce new taxes, Finance Minister Manapreet Singh Badal said there are proposals that would be put forward in the forthcoming cabinet meeting, but he was not ready to comment.

However, government sources indicated that cess on diesel would be imposed. Also, VAT rates on pesticides and fertilisers may be increased.

Commenting upon VAT collection, he said, "In last financial year, the VAT collection was Rs 5,300 crore. This year we are expecting around 25 per cent annual growth in VAT collection from the existing 10.8 per cent".

Manapreet said with the increasing economic activity, especially after the announcement of Bhatinda Refinery and setting up of three thermal plants in the state, he hoped the stamp duty collection in the state to rise to Rs 2,300 crores from the existing Rs 1,700 crores.

He said with the announcement of refinery, many real estate developers showing interest in setting up residential colonies in the vicinity of refinery.

He said the tax collection system was being streamlined and the government was taking every measure to increase penetration and compliance of tax system in the trade and industry.

He said in an effort to make the tax collection system more effective the finance department has allowed the recruitment of more tax inspectors in the state so that they could compile the database by 'street by street audit' of various industry establishments.

He also added that the state government has taken various measures to make VAT system in Punjab people friendly by introducing e-filing of VAT returns, minimising harassment at Information Collection Centres and allowing references to the Assessing Authority in case of default in the field.