The Punjab government has moved the Punjab and Haryana High court seeking directions to the Centre for paying the state the 3% infrastructure development (ID) cess on the procurement of food grains by the union agriculture ministry.
The hearing is fixed for July 15. On September 24, 2008, Punjab increased the ID cess from 2% to 3% but the Centre continues to pay back at 2%. The arrear, counted for the past six years, now is 850 crore.
In the petition, the Punjab has demanded the balance payment at the earliest, while the union ministry has called the claim unreasonable.
The cess is based on the Punjab Infrastructure Development Act under which Punjab Infrastructure Development Board (PIDB) was created.
“The cess is to fund development in the state, which has no major alter native sources of income.
We depend on money raised from the procurement of food grains,” said a state food department official, justifying the levy. All related taxes are based on the Punjab Agriculture Produce Marketing Act.
Other than the ID cess, the Punjab government collects 5% value-added tax (VAT), 2% rural development fund, 2% market fee, and 2.5% commission agent fee; taking the total taxes to 14.5%.
For the procurement of wheat on since April 1, the Centre has set Punjab’s cash credit limit at 18,300 crore Reserve Bank of India.
The tax will help the state government put maybe 2,250 crore in its coffers by the end of the procurement season, for temporary relief to the fatigued economy. It will help the state clear a month’s salary-and-pension bill for 2,000 crore.
The state government has a target of procuring 115-lakh tonne paddy in the current rabi season, and the minimum support price (MSP) is 1,400 per quintal.