Punjab okays taking perks out of ministers’ income tax liability

Tribune News Service
Chandigarh, August 5

The Punjab ministers and the Leader of Opposition (LoP) will no longer have to pay income tax on the perks allowed to them, once the proposed Bill to this effect is passed by the Vidhan Sabha.

The decision was taken on Monday at a meeting of the Council of Ministers headed by Chief Minister Capt Amarinder Singh, which decided to resolve the anomaly created inadvertently by a March 19, 2018 decision of the Cabinet.

Though the Chief Minister had earlier announced the decision to place tax burden on the salary and allowances of ministers on them, the entire Section 2-C of The East Punjab Ministers’ Salaries Act, 1947 was unintentionally removed while making the necessary amendment. As a result, all the perks also got included in the tax ambit of the ministers, which in some cases resulted in the tax liability turning out to be higher than the salary itself.

Since 1947, the Punjab government had been paying taxes on salaries/allowances and perks of the ministers, till the Amarinder government had decided to amend the law last year. Section 2-C had provided for income tax to be paid by the state government on the salary, allowances, free furnished house and other perquisites admissible to the Chief Minister, Ministers, Deputy Ministers and LoP.

According to an official spokesperson, to end the anomaly, the Council of Ministers has now decided to introduce and insert Section 2-C, since the intent of the amendment was that income tax on ‘Salaries and Allowances’ shall be paid by the ministers and not on other perks and benefits allowed to them. The proposed section would state: “The free furnished house and other perquisites admissible to a minister under this Act shall be exclusive of income tax, which shall be payable by the government.”

The draft Bill for amending the ‘The East Punjab Ministers’ Salaries Act, 1947, will be tabled in the House, according to an official spokesperson

For the MLAs, it is the state government which still pays the income tax on salary and allowances.