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Punjab to scrap octroi from Dec 1
P.P.S. Gill
Tribune News Service

Chandigarh, November 28
The Punjab Council of Ministers today decided to abolish octroi in the state from December 1 next.

The Minister of Local Government, Mr Balramji Das Tandon, told TNS that octroi would continue on two items: electricity consumption in cities and additional excise duty on liquor.

Meanwhile, a committee, headed by the Chief Secretary, Mr N.K. Arora, will examine the Arunesh Shakar report to shortlist which of the suggested options therein should be implemented to make up for the loss the municipalities would suffer on account of the abolition of octroi. The report will be expected in a fortnight.

The committee will examine the following three proposals made in the Shakar report: cess on sales tax, imposing entry tax and introducing self-assessment as in the case of sales tax payees. The Shakar panel had two other members, Dr Raj Kumar of Abohar and Mr Bhag Singh Mullah from Jagraon. Mr Tandon said the note of the Department of Finance was discussed at the meeting over which he had presided in the absence of the Chief Minister.

The Finance Minister, Capt Kanwaljit Singh, said because of the “difficult” financial situation he could not commit any support in lieu of the abolition of octroi from the current year’s Budget. The state had already taken up the matter with the Centre seeking a temporary loan of Rs 200 crore to tide over the situation created by the abolition of octroi, a “most obnoxious” tax. With today’s decision, Punjab, too, had joined the national mainstream. Now only Gujarat, Goa and Orissa had octroi besides a small number of corporations in Maharashtra, he added.

Asked how the government proposed to compensate the state’s 142-odd municipalities and four corporations, Mr Tandon said the council decided that each one would get the same sum by way of compensation as was collected by it in the form of octroi in the corresponding month last year. This would ensure there was no delay or denial of salaries to the staff and payments to contractors and the ongoing development works did not suffer. “We have ensured that the pace of development of the projects continues with the same vigour”, he added.

Mr Tandon also sought to allay the apprehensions of contractors that due to the abolition of octroi their payments would be withheld. Care had been taken to ensure that 4,000-odd employees engaged in octroi collection were not retrenched and got their pay and pensionary benefits as usual.

The council, Mr Tandon said, also discussed the issue of entry tax on petroleum products. At least at four points — Patiala, Sangrur, Bathinda and Jalandhar — the supply was through a pipeline. In future the billing would include octroi. The total octroi collection in the state, barring realisation from octroi on electricity consumption and additional excise duty on liquor, was around Rs 425 crore.

Mr Tandon admitted that the benefits as such might not be much to the general consumers but the decision taken today would have a psychological impact. Besides being an election commitment and part of the Common Minimum Programme, the octroi system as such and its privatisation was a big source of “harassment” to the public. It also led to corruption, traffic hold-ups and other problems. There were instances of body searches to detect if someone was carrying cell-phone chips. “Therefore, the decision to do away with octroi has to be viewed in a wider perspective”, he added.

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