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Social security cess on registration of properties is on the agenda: Punjab cabinet

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While re-imposing the social security fund, the state cabinet will also have to keep in mind that elections of a total of 127 civic bodies in the state are due this year, as their five-year term is coming to an end.

The proposal to reimpose social security cess on registration of properties is on the agenda for discussion in the Punjab cabinet meeting scheduled on Tuesday.

Though the local bodies department has proposed an imposition of 2% social security cesson the registration of properties, the finance department has advised that only 1% social security cess should be levied. With the reimposition of the social security fund, the state government aims to collect roughly over Rs 400 crore through stamp duty and registration of properties.

While re-imposing the social security fund, the state cabinet will also have to keep in mind that elections of a total of 127 civic bodies in the state are due this year, as their five-year term is coming to an end. Also, the cash-strapped state government is facing poor collection of tax as well as non-tax revenue this year. In the first three quarters of fiscal year 2019-20, the state government could generate only Rs 1,713 crore from stamps and registration till December 2019 against its annual target of Rs 2,650 crore, which comes to 64%.

After coming to power in Punjab, the Congress government had in July 2017 waived 3% social security cess on property registration in urban areas across the state. But revenue minister Sukhbinder Singh Sarkaria in February last year had informed the state assembly during the budget session that the waiver was resulting in revenue loss to the state exchequer. Sarkaria had then announced that the social security cess would be re-imposed from April 2019. But the state government had deferred re-imposition of the social security cess in view of the Lok Sabha elections last year.

At the same time, the state government is going to borrow Rs 600 crore through “the sale of Punjab government stock (securities) of 15-year tenure”. The market borrowing is being undertaken to finance part of capital expenditure of plan schemes, to meet the expenditure on account of committed liabilities and other development schemes under execution. As per the ongoing practice, the government stock will be sold through the Reserve Bank of India (RBI) on February 18. According to procedure, the Punjab government has got Union government’s consent for this loan as required by Article 293(3) of the Constitution of India. Under the Fiscal Responsibility and Budget Management (FRBM) Act, the state government can borrow from the market 3% of its Gross State Domestic Product (GSDP). Punjab’s GSDP for the fiscal year 2019-20 (at current prices) is estimated to be Rs 5,77,829 crore.

The state government has already carried out market borrowing of Rs 8,335 crore in this fiscal year till December 31, 2019. Punjab has also not yet received its share of GST compensation since October 2019 amounting to around Rs 4,100 crore.

Source: TNN

(Note: The story has been published without modifications to the text. Only the headline and intro have been changed.)

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