Punjab is pinning hopes on the Centre to rescue the state from the losses it will suffer on account of the cessation of purchase tax on food grains, after goods and services tax (GST) is implemented.
Being a major producer of food grains, the state earns around Rs 2,000 crore per annum from purchase tax. It stands to loose out on this revenue after GST which is an alternative to value added tax (VAT) proposed by the Centre is introduced. The issue will be discussed on June 21 in a meeting which has been called on by the finance minister Pranab Mukherjee where he will impress upon states to adopt GST. Various states like Haryana, Madhya Pradesh, Andhra Pradesh and Rajasthan are opposing GST as they fear that its introduction could potentially bleed their exchequers dry.
Punjab says it is ready to roll out GST by April 2011 if it gets compensated adequately on account of purchase tax. Punjab finance minister Manpreet Singh Badal said, ?When 148 countries have adopted GST then there is no reason that India should be left behind. No doubt once the GST is in place, it will enhance the tax compliance. But, it should be noted that the state has been putting a lot of efforts to ensure the food security of the nation. The state offers various kinds of subsidies in the agriculture sector so that food stocks are taken care of. On this account, we are demanding that the Centre should provide compensation as we will loose major chunk of revenue which comes from purchase tax.?