State govts want Rs 2,500 ceiling to be scrapped
Delhi residents will join professionals of six other states in paying a professional tax if the 2010-11 budget proposals of MCD are accepted.
By TNN |
NEW DELHI: Delhi residents — salaried, in trade or self-employed — will join professionals of six other states in paying a professional tax if the 2010-11 budget proposals of Municipal Corporation of Delhi are accepted.
Already states like Karnataka, Maharahstra , West Bengal, Andhra Pradesh, Tamil Nadu and Gujarat levy this tax with the Centre having imposed a ceiling of Rs 2,500. There was a long-pending demand of the state governments for raising this ceiling on professional tax from Rs 2,500 to Rs 7,500 per annum. KP Garg, president of the Bar Association of Income Tax Settlement Commission, said this was long overdue as many other states already levy this tax. He, however, felt the Centre should consider revising the ceiling as the current cap at Rs 2,500 annually is too low since there is a lot of cost involved in collection.
Though the matter was placed before Cabinet in July 2008 seeking to amend Article 276 of the Constitution that empowers states to levy the tax with a cap. The amendment to Article 276 was sought to raise the limit. The Centre was averse to raising the limit since it also allows a professional to seek deduction under the Income Tax Act. So while the state gains from the raised tax amount, the Centre loses revenue through direct tax collection. The ceiling of Rs 2,500 was fixed in 1998.
Tax raised by different states adds up to Rs 3,500 crore, an argument given by states that since the amount is not very big, the Centre may consider raising the ceiling to Rs 10,000 per annum as income levels of individuals have gone up substantially in the last one decade.
Already states like Karnataka, Maharahstra , West Bengal, Andhra Pradesh, Tamil Nadu and Gujarat levy this tax with the Centre having imposed a ceiling of Rs 2,500. There was a long-pending demand of the state governments for raising this ceiling on professional tax from Rs 2,500 to Rs 7,500 per annum. KP Garg, president of the Bar Association of Income Tax Settlement Commission, said this was long overdue as many other states already levy this tax. He, however, felt the Centre should consider revising the ceiling as the current cap at Rs 2,500 annually is too low since there is a lot of cost involved in collection.
Though the matter was placed before Cabinet in July 2008 seeking to amend Article 276 of the Constitution that empowers states to levy the tax with a cap. The amendment to Article 276 was sought to raise the limit. The Centre was averse to raising the limit since it also allows a professional to seek deduction under the Income Tax Act. So while the state gains from the raised tax amount, the Centre loses revenue through direct tax collection. The ceiling of Rs 2,500 was fixed in 1998.
Tax raised by different states adds up to Rs 3,500 crore, an argument given by states that since the amount is not very big, the Centre may consider raising the ceiling to Rs 10,000 per annum as income levels of individuals have gone up substantially in the last one decade.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
