Chandigarh, June 26
The Punjab Council of Ministers today decided to abolish octroi in the state. The decision will be applicable from September 1 and no new taxes will be levied to compensate for the expected Rs 645 crore loss of revenue. However, octroi on electricity, petrol, diesel and liquor will continue to be levied and will bring in Rs 101 crore.

The Punjab Chief Minister, Capt Amarinder Singh, said the Council of Ministers had approved the abolition of octroi and the 500-odd octroi collection barriers across the state would be removed from September 1. The Chief Minister claimed that with this step 65 out of the 66 promises made in the Congress manifesto had been fulfilled. The financial loss caused to the municipal bodies due to the abolition of octroi would be met by segregating a part of the collections made from value added tax into a specially set up Municipal Development Fund, which would be operated by the Department of Local Government.

Capt Amarinder Singh said the government was expected to collect Rs 5,500 crore through VAT this year as against the target of Rs 4,600 crore, an increase of over Rs 900 crore.

The Department of Local Government would ensure that the present level of revenue from octroi of all municipal councils in the state was protected and these also got an annual enhancement on the basis of an increase in revenue.

Besides, the department would ensure the rational re-deployment of employees of the municipal councils so that no harm came to them as a result of the new scheme of things. These employees would not be retrenched under any circumstances. Sources said the employees would be deployed with the Excise and Taxation Department, which needed more staff.

Actually, this year the government would be collecting octroi till August 31. Till then, five months of this financial year will be over. By then, it is expected that almost half of the Rs 550 crore revenue will be collected. So this year the loss to the exchequer will be between Rs 225 crore and Rs 250 crore.