Punjab Tax and Economic Reform

Tax is very important very important part of government revenues. But sometimes it is necessary to reform the tax structure keeping eye on current economic conditions. We will learn about Tax and Economic Reforms in Punjab in the following paragraphs.

Fiscal Reforms in Punjab

Monetary changes frame a vital piece of any change program and empowers a legislature to execute the improvement situated strategies all the more viably. The most imperative factor in charge of the declining financial execution of Punjab is its gross financial bungle.

Punjab has been under monetary worry since the mid-1980s, when it turned into a income shortfall state. Punjab had the questionable qualification of being among the states with the most astounding financial shortage in the nation toward the start of the change period. Militancy, which went on for over 10 years in the State, was one of the significant reasons for its poor financial condition however not by any means the only reason as announced in the White Paper on State Finances (2002).

It additionally drew out the Elements that antagonistically affected the State’s monetary circumstance which incorporate the regularly expanding weight of submitted use – compensation, pay rates, benefits, intrigue installments on mounting open obligation, control sponsorships, misfortune making open endeavors and moderate development of income.

Populism undermines the limit of the administration to raise assets and enhance the efficiency of income. Low water system charges, free power for the ranch area, cancelation of octroi and uneconomic transport charges included to the weight the state exchequer and brought about further decrease in venture on wellbeing, training and other social administrations. The populist approaches in the State have brought about an excessive amount of obligation over the a long time. The GOP has taken all the institutional and sectoral measures recommended by the GOI, Reserve Bank of India and different offices to accomplish monetary adjusts what’s more, reestablish full scale monetary steadiness in the state funds.

According to a current report of the Confederation of Industry/”>Indian Industry (CII) on a relative investigation of State Finances of Northern States, the Gross Fiscal Shortage as an extent of Gross State Domestic Product (GSDP) in Punjab was 3.1 for the normal of 2005-08 and 4 for 2008-09, though it ought not be more noteworthy than 3 percent according to the FRBMA. The income shortage as level of GSDP was 1.8 for 2005-08 and 2.9 out of 2008-09, in spite of the receipt of Non-design Income Deficit Grant from the GOI, though it ought to have been totally wiped out with a specific end goal to meet the Fiscal Responsibility targets.

It is prominent that on one record Punjab has met the FRBMA target, i.e., obligation to GSDP proportion which was 42.6 as the normal for 2005-08 declined to 35.2 percent for 2009-10 (RE); despite the fact that the time allotment of this objective has not been clung to as it was gathered to be accomplished by 31 March, 2007. So, it might be said that Punjab is still having monetary awkward nature regardless of different change allots spelt by the government.

Goods and Services Tax (GST) is a comprehensive Indirect Tax on manufacture, sale, and consumption of goods and services throughout India. GST would replace respective taxes levied by the central and state governments.

What is GST?

It is a destination-based Taxation system.
It has been established by the 101st Constitutional Amendment Act.
It is an indirect tax for the whole country on the lines of “One Nation One Tax” to make India a unified market.
It is a single tax on supply of Goods and Services in its entire product cycle or life cycle i.e. from manufacturer to the consumer.
It is calculated only in the “Value addition” at any stage of a goods or services.
The final consumer will pay only his part of the tax and not the entire supply chain which was the case earlier.
There is a provision of GST Council to decide upon any matter related to GST whose chairman in the finance minister of India.

What taxes at center and state level are incorporated into the GST?

At the State Level

State Value Added Tax/Sales Tax
Entertainment Tax (Other than the tax levied by the local bodies)
Octroi and Entry Tax
Purchase Tax
Luxury Tax
Taxes on lottery, betting, and gambling

At the Central level

Central Excise Duty
Additional Excise Duty
Service Tax
Additional Customs Duty (Countervailing Duty)
Special Additional Duty of Customs

Benefits of GST

For Central and State Governments

Simple and Easy to administer: Because multiple indirect taxes at the central and state levels are being replaced by a single tax “GST”. Moreover, backed with a robust end to end IT system, it would be easier to administer.
Better control on leakage: Because of better tax compliance, reduction of rent seeking, transparency in taxation due to IT use, an inbuilt mechanism in the design of GST that would incentivize tax compliance by traders.
Higher revenue efficiency: Since the cost of collection will decrease along with an increase in the ease of compliance, it will lead to higher tax revenue.

For the Consumer

The single and transparent tax will provide a lowering of Inflation.
Relief in overall tax burden.
Tax Democracy that is luxury items will be taxed more and basic goods will be tax-free.

For the Business Class

Ease of Doing Business will increase due to easy tax compliance.
Uniformity of tax rate and structure, therefore, better future business DECISION MAKING and investments by the corporates.
Removal of cascading effects of taxes.
Reduction in transactional cost will lead to improved competitiveness.
Gain to the manufacturer and exporters.
It is expected to raise the country GDP by 2% points.

GST Council

It is the 1st Federal Institution of India, as per the Finance minister.
It will approve all decision related to taxation in the country.
It consists of Centre, 29 states, Delhi and Puducherry.
Centre has 1/3rd voting rights and states have 2/3rd voting rights.
Decisions are taken after a majority in the council.

Supporting Laws to implement GST

For the implementation of GST, apart from the Constitution Amendment Act, some other statutes are also necessary. Recently 5 supporting laws to the GST were recommended by the council. 4 for the bills should be passed by the parliament, while the 5th one should be passed by respective state legislatures. The details are given below.

The Central Goods and Services Tax Bill 2017 (The CGST Bill).
The Integrated Goods and Services Tax Bill 2017 (The IGST Bill).
The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill).
The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill).
And a state GST will be passed by the respective state legislative assemblies.
Tax slabs are decided as 0%, 5%, 12%, 18%, 28% along with categories of exempted and zero rated goods for different Types of Goods and services.
Further, a cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28% for payment of compensation to the States.
However, which goods and services fall into which bracket is still an enormous task to be completed by the GST council.
Highest tax slab is pegged at 40%.

DEMONETIZATION AND CASHLESS economy

What is Demonetization?

It is a financial step where in a currency unit’s status as a legal tender is declared invalid.
This is usually done when old currency notes are to be replaced with the news ones.
The 500 and 1000 rupee notes seized to be a legal tender from 8 November, 2016.

A brief past

Demonetisation was earlier done in 1978 When the government demonetised Rs. 1000, Rs. 5000 and Rs. 10000 notes.
This was done under the High Denomination Bank Note (Demonetisation) Act, 1978.
The difference between 1978 and 2016 Demonetisation is that the currency in circulation (of the higher denomination) is higher in 2016 than was in 1978.
The current demonitization has been done by government under section 26(2) of the Reserve Bank of India Act.

Implications of Demonetization

A parallel black economy would collapse.
Of the Rs 17 lakh crore of total currency in circulation in the country, black Money is estimated at mind-boggling Rs 3 lakh crore.
Counterfeit currency: Death blow to the counterfeit Indian currency syndicate operating both inside and outside the country.
On EMPLOYMENT: a large part of the Indian economy is still outside the Banking system. So, the cash shortage will hurt the informal sector that does most of its transactions in cash.
On Elections: It will reduce the Vote-for-Note politics making elections more clean and transparent.
On Economy:
First, it will bring more borrowings to the exchequer, improve inflation outlook and increase India’s gross domestic product (GDP).
Second, it will revive Investment opportunities and give a fillip to Infrastructure-2/”>INFRASTRUCTURE and the manufacturing sector.
Third, it will help reduce interest rates and lower Income tax rate.
Real estate cleansing: An unexpected dip in land and property prices.
On Higher Education: will become more reachable as the black money from ‘high capitation fees’ is discouraged.
On security:
Terror financing: Terror financing is sourced through counterfeit currency and hawala transactions.
Kashmir unrest: The four-month-long unrest in Kashmir valley is on a backburner
North-East insurgency and Maoists: Black money is the Oxygen for Maoists collected through donations, levy and extortions. The illicit money is used to purchase arms and ammunition

Reforming the urban property tax in punjab

The legislature of Punjab faces a genuine financial test in paying for the conveyance of fundamental open administrations. Developing requests for more prominent responsibility by voters now imply that genuine endeavors to change the administration’s expense limit must be investigated.

Streets, streetlights, policing and sanitation are a portion of the administrations for which governments demand the property charge in urban areas and towns. As an extent of aggregate nearby government incomes and an offer of GDP, the urban property charge gathered in Punjab is around one fifth of that gathered by areas in equivalent nations. The expenses of urban administration arrangement likewise far surpass the assessment incomes gathered. Nonetheless, Punjab can build its accumulation to more than 25 billion PKR with extensive changes. This will be commonly more than what is gathered today, and will add up to 8 percent of Punjab’s advancement spending plan and 31 percent of its wellbeing and instruction spending plan for 2014-15.

The low levels of duty gathered the nation over – under 10 percent of the GDP – puts Punjab’s property assess accumulation issues into point of view. Pakistan fairs ineffectively in contrast with other South-Asian nations (India: 15 percent and Sri Lanka: 13 percent) and the normal for creating nations (15 percent). Regions represent a little part of the national duty income (5 percent of aggregate national expense income or short of what one percent of GDP). This profile has changed little in the previous decade, in spite of common consumptions representing an expanded offer of national spending. Common expense gathering is additionally profoundly wasteful.

This needs to change after the section of the eighteenth Constitutional Amendment which appoints greater duty to territories for the conveyance of social administrations like training and wellbeing. Furthermore, the voters know it. This implies spending should be expanded. To get this going, a more grounded income gathering exertion should be embraced in the areas.

Common and nearby governments require stable wellsprings of self-produced income to anticipate the basic foundation speculations expected to advance monetary improvement in our urban areas. In Light of global experience, a basic wellspring of this self-created income is property impose from urban ranges. The Economist magazine reports examines demonstrating that urban property charges are the most monetary development agreeable of all major expenses

NO new duty is proposed in Punjab in Budget 2017

The Punjab government introduced Budget for the 2015-16 budgetary year without proposing any new charges.

Showing his fourth progressive Budget, Punjab Finance Minister Parminder Singh Dhindsa evaluated a shortage of Rs 125 crore at the end of 2015-16 monetary year.

The receipts for the following monetary have been proposed at Rs 60,585 crore as against Rs 54,096 crore in current money related year. Dhindsa said Rs 60,585 crore receipts in coming monetary incorporate Rs 46,229 crore of income receipts and Rs 14,356 crore of capital receipts as against the present year figures of Rs 42,742 crore and Rs 11,353 crore, individually.

The consumption has been proposed at Rs 61,814 crore as against the present year’s figure of Rs 56,431 crore. Financials proposition incorporate Rs 52,623 crore of income use, Rs 4,857 crore of capital cost, Rs 3,598 crore of reimbursement of open obligation and Rs 736 crore of advances and propel disbursals.

Monetary shortage will be 2.98 for each penny of GSDP (Gross State Domestic Product) and income deficiency will be 1.60 for each penny of GSDP.,

Punjab Tax and Economic Reform

Punjab is one of the most populous and economically important provinces in Pakistan. In recent years, the provincial government has made significant progress in reforming its tax and economic policies. These reforms have helped to improve the province’s fiscal position, attract investment, and create jobs.

One of the most important Tax Reforms in Punjab has been the introduction of a new personal income tax system. The new system is simpler and fairer than the previous system, and it has helped to increase tax compliance. The government has also made progress in reforming the corporate income tax system. The new system is more competitive than the previous system, and it has helped to attract investment.

The government has also made progress in reforming the sales tax system. The new system is simpler and more efficient than the previous system, and it has helped to increase tax revenue. The government has also made progress in reforming the property tax system. The new system is more equitable and efficient than the previous system, and it has helped to increase tax revenue.

In addition to tax reforms, the government has also made progress in reforming its economic policies. The government has introduced a number of measures to promote investment, including tax breaks and incentives. The government has also taken steps to liberalize trade, which has helped to boost exports. The government has also invested in infrastructure, which has helped to improve the business Environment.

The government has also made progress in Human Capital development. The government has increased spending on education and Health, and it has introduced a number of reforms to improve the quality of education and health services. The government has also taken steps to promote Equality/”>Gender Equality, which has helped to improve the lives of Women and children.

The government’s tax and economic reforms have had a positive impact on the province’s economy. The reforms have helped to improve the province’s fiscal position, attract investment, and create jobs. The reforms have also helped to improve the Quality Of Life for the people of Punjab.

However, there are still some challenges that need to be addressed. The government needs to continue to improve the efficiency of its tax collection system. The government also needs to continue to invest in infrastructure and human capital development. The government also needs to continue to promote investment and trade.

Despite the challenges, the government’s tax and economic reforms have been successful in improving the province’s economy. The reforms have helped to improve the province’s fiscal position, attract investment, and create jobs. The reforms have also helped to improve the quality of life for the people of Punjab.

What is the Punjab Tax and Economic Reform?

The Punjab Tax and Economic Reform is a comprehensive reform package that aims to improve the efficiency and effectiveness of the Punjab government’s tax system. The reform package includes a number of measures, such as simplifying the tax code, reducing tax rates, and improving tax administration.

What are the benefits of the Punjab Tax and Economic Reform?

The Punjab Tax and Economic Reform is expected to have a number of benefits, including:

Increased tax revenue: The reform package is expected to increase tax revenue by making the tax system more efficient and effective.
Reduced compliance costs: The reform package is expected to reduce compliance costs for businesses and individuals, making it easier for them to comply with the Tax Laws.
Improved business environment: The reform package is expected to improve the business environment in Punjab by making it easier for businesses to operate and invest in the province.
Increased economic Growth: The reform package is expected to increase economic growth in Punjab by making it easier for businesses to operate and invest in the province.

What are the challenges of the Punjab Tax and Economic Reform?

The Punjab Tax and Economic Reform faces a number of challenges, including:

Political opposition: The reform package has been met with some political opposition, as some politicians believe that it will not be effective or that it will harm the interests of certain groups.
Implementation challenges: The reform package is complex and will require a significant effort to implement. There is a risk that the reform package will not be implemented effectively, which could undermine its benefits.
Public resistance: The reform package is likely to face some public resistance, as some people may be concerned about the impact of the reform on their taxes or businesses.

What is the future of the Punjab Tax and Economic Reform?

The future of the Punjab Tax and Economic Reform is uncertain. The reform package has been met with some political opposition and implementation challenges. There is a risk that the reform package will not be implemented effectively, which could undermine its benefits. However, the reform package also has the potential to improve the efficiency and effectiveness of the Punjab government’s tax system and to have a number of benefits for the province.

Question 1

Which of the following is not a type of tax?

(A) Income tax
(B) Sales tax
(C) Property tax
(D) Wealth tax

Answer
(D) Wealth tax is not a type of tax. It is a type of asset tax.

Question 2

Which of the following is not a government revenue?

(A) Taxes
(B) Borrowing
(C) Spending
(D) Fines

Answer
(C) Spending is not a government revenue. It is a government expenditure.

Question 3

Which of the following is not a government expenditure?

(A) Transfer Payments
(B) Purchases of goods and services
(C) Interest payments
(D) Taxes

Answer
(D) Taxes are not a government expenditure. They are a government revenue.

Question 4

Which of the following is not a macroeconomic objective?

(A) Economic growth
(B) Price stability
(C) Full employment
(D) Government revenue

Answer
(D) Government revenue is not a macroeconomic objective. It is a government policy tool.

Question 5

Which of the following is not a microeconomic objective?

(A) Efficiency
(B) Equity
(C) Consumer surplus
(D) Producer surplus

Answer
(C) Consumer surplus is not a microeconomic objective. It is a measure of economic welfare.

Question 6

Which of the following is not a market failure?

(A) Externalities
(B) Public goods
(C) Monopoly power
(D) Government regulation

Answer
(D) Government regulation is not a market failure. It is a policy tool that can be used to address market failures.

Question 7

Which of the following is not a type of government regulation?

(A) Price controls
(B) Quantity controls
(C) Standards
(D) Taxes

Answer
(D) Taxes are not a type of government regulation. They are a government policy tool that can be used to address market failures.

Question 8

Which of the following is not a benefit of government regulation?

(A) It can improve efficiency.
(B) It can protect consumers.
(C) It can protect the environment.
(D) It can promote competition.

Answer
(D) Government regulation can promote competition, but it is not a benefit of government regulation. It is a policy tool that can be used to address market failures.

Question 9

Which of the following is not a cost of government regulation?

(A) It can reduce efficiency.
(B) It can increase prices.
(C) It can reduce innovation.
(D) It can create a barrier to entry.

Answer
(D) Government regulation can create a barrier to entry, but it is not a cost of government regulation. It is a policy tool that can be used to address market failures.

Question 10

Which of the following is not a type of economic policy?

(A) Monetary Policy
(B) Fiscal Policy
(C) Trade Policy
(D) Government regulation

Answer
(D) Government regulation is not a type of economic policy. It is a policy tool that can be used to address market failures.