M A I N   N E W S

Octroi to go on July 1
PPS Gill
Tribune News Service

Chandigarh, February 19
The Punjab Congress government has decided in principle to abolish octroi with effect from July 1, it is reliably learnt. The proposed alternative to octroi is the introduction of Local Area Development Tax (LADT). For this a Bill is being drafted to be placed before the Vidhan Sabha. This switch over is designed in a fashion that: (1) It will not affect the development of cities and service interests of the municipal employees; (2) It will provide relief to trade and industry; and (3) It will make state’s tax structure VAT (value added tax) complaint. The decision to abolish octroi is to do away with the ‘’obnoxious and archaic’’ tax.

The move is also intended to greatly facilitate free movement of goods within and from out side the state.

At present octroi revenue that accrues to the municipalities is about Rs 500 crore, per annum. The proposed LADT, say sources, will be easy to access, buoyant and on-the-spot transferable to the municipalities, directly through the regional offices of the department of Local Government.

The LADT will be levied ad valorem on all goods, which are imported into the state from outside. The rate of this new tax will be fixed so as to generate at least Rs 500 crore, per annum, for the allocation to the municipalities, depending upon the volume of imports from other states.

The LADT proceeds, say sources, will be collected at the existing sales tax barriers and there would be on-line collection facility so that tax payers do not have to carry cash. These proceeds would be further transferred on-line to the regional offices of the Department of Local Government, headed by a Deputy Director for onward transmission to the municipalities in their jurisdiction, according to a pre-determined formula.

The proceeds from LADT will not form part of the state’s consolidated fund and municipalities will be ensured prompt and on-line transfer so that development works do not suffer. Once the LADT comes into operation, entry tax on various items will stand abolished, doing away with multiplicity of taxes.