Fiscal reforms

People of J&K paid up more in income tax that as electricity tariff but the exchequer receives much less that the stat’s needs.

While everybody is writing about how much the government is spending in J&K, quite a few people might be interested in how much people pay in taxes. By the end of March 2011, people had paid up Rs 3600 crores as tax to the state government. It includes the sales tax, the excise, passenger tax and stamp duty, but excludes Rs 1179 crores that J&K paid as Income Tax for 2010-11. Interestingly, the income tax is more than the total electricity tariff the government collected.

That essentially does not mean public finances of the state government are not under strain. They started the year by getting RBI as their debt manager. The pressure on the exchequer is so huge that more than half of the overall spending goes out as salaries, pensions and the interest payments leaving just a bit for developmental activities. This has meant that newly recruited in government will take a salary hit. The government adopted a new system under which the new recruits will deliver what the job would dictate but they would paid half of the basics till they are five year old in the government. This set many tongues wagging especially in a season when lawmakers hiked their own take away. The government sees no other option but to make some saving on salary front.

While the panchayat elections have made the government eligible to for around Rs 350 crores a year from the central government, they are caught in a crisis on property tax. The government passed a law in the budget session and started the process of setting up a board but the opposition to the idea reduced it to a non-starter. Last month when Tara Chand and Nasir Aslam Wani attended a national level interaction on the urban affairs, they were literally begging for some funds stopped for want of reforms.

Right now, however, the government is logged in a war of wits with the lawyers in Srinagar as well as in Jammu. The contentious issue is the transfer of registration system from the judiciary to the revenue department. It is a process that exists only in J&K where the registration of sales is done in the courts. Administration apart, there are enough and valid reasons for setting up of a separate department for registrations and stamp duty. Certain reforms on this front have already triggered a change. In less than half a year, the collections from stamp duty have doubled.


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