Punjab cuts property tax, VAT on iron & steel

Chandigarh, January 20
The Punjab cabinet today approved various sops for the urban voter. These include slashing the Value Added Tax on iron and steel goods and tobacco products, an insurance scheme for traders; and reducing property tax on residential properties.

The cabinet also extended the last date for seeking a rebate on property tax.

These steps come only a few months before the Lok Sabha polls. The BJP, SAD's coalition partner, has let it be known several times that property tax (even after it was watered down) had weaned away the urban voter from it.

The VAT step is aimed at reviving the iron and steel industry in the state, especially in Mandi Gobindgarh, where 155 units shut shop in just nine months last year because of anomalies in tax structure and shrinking profit margins.

Punjab cabinet, headed by Chief Minister Parkash Singh Badal, cleared slashing VAT on iron and steel goods (except the CENVAT paid scrap) from 4.50% (with 10%surcharge), to 2.5% (plus the surcharge). Advance tax on scrap has also been cut from 4.5% to 2.5% (on which CENVAT is paid) and to just one percent (with 10 percent surcharge) on scrap brought from outside the state (including scrap bought from scrap dealers) on which CENVAT has not been paid.

The Cabinet also approved input tax credit in two stages, on the pattern of central excise, and fixed it at 2.5 percent.

The state government will take a hit of Rs 200 crore in its revenue.

The cabinet also approved withdrawal of enhanced SIN tax on cigarettes and other tobacco products.

Over 1.86 lakh traders, having an annual turnover of less than Rs 1 crore, will also be covered by a accident and disability insurance (up to Rs 2 lakh), against fire (up to Rs 5 lakh) and health (up to Rs 50,000 and cashless insurance). The state government will incur an expenditure of Rs 25 crore on this. Businessmen, covered under any other social security scheme, would not be eligible for this.

The other decisions approved by the Cabinet include an exclusive court for NRIs, reduction in property tax on residential properties from 7.5 per cent to 3 per cent; and exemption to city bus service from all the motor vehicle taxes within the municipal corporation limits of the towns. It also paved the way for an ordinance empowering the Right to Service Commission to impose a penalty on the designated officers who fail to provide services within the stipulated time period.