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‘States must be compensated for revenue losses from note ban’

Delhi Deputy Chief Minister Manish Sisodia on Wednesday said the central government must compensate the state governments for their revenue losses due to demonetisation.

Sisodia, who also holds the finance portfolio, raised this point in the pre-budget consultation meeting of state Finance Ministers with Union Finance Minister Arun Jaitley. He noted that due to demonetisation the growth of tax revenue under Value Added Tax (VAT) has shown a negative growth in December, 2016 as compared to December, 2015.

“It will not be possible to achieve the target of tax revenue in the current financial year and as a result all developmental works being implemented by the government may suffer due to lack of resources,” he said.

Sisodia also said that the central government was giving only Rs 325 crore as a share of Central Taxes to Delhi which was stagnant from the last 15 years.

“Central government treated Delhi as a Union Territory for payment of share in central taxes and as a state when 100 per cent central funding of Centrally Sponsored Schemes (CSS) to Union Territory comes into the picture,” he said.

Sisodia, while speaking during the pre-Budget consultation meeting with Jaitley for the Budget of 2017-18 on Wednesday, suggested withdrawal of service tax imposed by the Union government applicable on revenue collected from air conditioned bus services. The Centre collects 15 per cent service tax on 40 per cent revenue generated by the state governments from luxury bus services.

He informed that the AAP-led government in Delhi is making all efforts to promote public transport to mitigate air pollution in the city and to offset the additional liability of service tax imposed by the Centre, about 6 per cent of the fare of AC buses needs to be increased which will discourage the common man to use the public transport. He further pointed out that the Central Excise Duty of about 12.625 per cent on fully built CNG buses may also be exempted by the government of India to reduce the cost of public transport. He also pointed out that the Centre is giving only Rs 325 crore as a share of Central Taxes to NCT of Delhi which is stagnant from the last 15 years. 

Also, the local bodies are not getting any basic and performance grants as recommended by 14th Central Finance Commission to all local bodies of other states. He raised the issue saying: “The Centre treated Delhi as a Union Territory for payment of share in Central Taxes and as a state when 100 per cent central funding of Centrally Sponsored Schemes to Union Territory comes into the picture.”
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