Punjab Finance Bill 2007-08 tabled before the Punjab Assembly on Thursday proposes rationalisation of stamp duty on various financial instruments and reduction in electricity duty.
Punjab Finance Minister Sardar Husnain Bahadur Dreshak tabled the bill before the House and said that in the bill they proposed rationalisation of Stamp Duty on various financial instruments and reduction in electricity duty after amending both the Stamp Act, 1899 and the Punjab Finance Act, 1964.
For the Stamp Act 1899, the bill proposes the following amendments: in Article 27, under the heading 'Proper Stamp-duty', the words 'per annum' shall be omitted; and in Article 49, in clause (b), under the heading 'Proper Stamp-duty', after the word 'payable', the words 'subject to a maximum of Rs 100,000' shall be inserted.
The Bill states that in 2006-07, Stamp Duty on various financial instruments was rationalised. Accordingly, while amending Article 27 regarding Debentures or Participation Term Certificate (PTC) or Term Finance Certificate (TFC) through the Punjab Finance Act 2006, the Stamp Duty was prescribed by lowering the rate from 0.15 percent to 0.05 percent of the face value per annum subject to a maximum of Rs 1 million.
It has been observed that Stamp Duty on Debentures or PTC or TFC, etc, would have to be paid annually whereas prior to July 1, 2007, it was chargeable on first issue of Debentures or PTC or TFC, etc. It has resulted in extra burden of duty.
"Therefore, in order to remove the discrepancy and extra burden of the duty to be paid annually, the words 'per annum' are proposed to be deleted so that the duty is charged on the said instruments on their first issue.
Similarly, the rate of Stamp Duty on Promissory Note including Commercial Paper when payable, otherwise than on demand was reduced from 0.20 percent to 0.02 percent per annum of the amount payable. It has been fell that without capping the rate of duty on such financial instruments the impact of Stamp Duty on higher valued instruments could be substantial.
It would make the financial market in the Punjab unattractive in this area. Therefore, it has been proposed to cap the Stamp Duty to a maximum of Rs 100,000," the bill added.
On Electricity Duty, the Punjab government, through the bill, proposed amendments for reduction in its rates. The bill observed that Electricity Duty was levied through the Punjab Finance Act 1964. Its levy and collection is directly linked with Wapda Tariff at a percentage of the cost of Energy Charges. From February 24, 2007, new Wapda Tariff was notified comprising two parts, ie Fixed charges and Variable charges.
Existing energy charges, fuel adjustment surcharge, hydel surcharge and additional surcharge have been merged in Variable charges. The term Energy charges given in the existing schedule of Electricity Duty no longer exists.
Variable charges for DISCOs Tariff or Supply Charges for Small Power Producers (SPPs), being the cost of energy per unit, have taken place to that of Energy Charges. Revision/rationalisation of existing schedule of Electricity Duty is necessary because the term energy charges does not exist in Wapda Tariff and the incidence of Duty has been increased manifold. In order to save the consumers of electricity from payment of considerable amount of Electricity Duty the existing rates of Duty are proposed to be reduced.
Therefore, under the proposed revision of the Electricity Duty, in case of energy supplied by a licensee to domestic user the rate has been proposed to be reduced from seven percent to 1.5 percent, commercial users from three percent to 1.5 percent, industrial users from three percent to one percent, tube-wells for irrigation and agricultural machinery from four percent to one percent and premises where the supply of energy by a licensee is un-metered from four percent to 1.5 percent.
The Electricity Duty would be on the amount of variable charges or the supply charges worked out according to electricity tariff. Moreover, in case of energy not supplied by a licensee to consumers of domestic user, the Electricity Duty would be 5.5 paisa per unit and for industrial users 1.5 paisa per unit.