Punjab industry pleads for lowering duty on electricity
PUNJAB is among the few states in the country which a high duty on electricity at the rate of 10% while most other states have duty on specific basis. Punjab too had electricity duty on specific basis for decades at 11 paise a unit. However, in 2003, the then state government changed it to ad valorem basis at 5%. When the Punjab State Electricity Regulatory Commission (PSERC) reduced the tariff rates of power, the state government raised the duty to 10%.At the present, the burden of electricity duty is 40 paisa on industrial consumers in Punjab and 46 paisa on domestic and other consumers in the state. In addition to this,there is octroi of 4 paisa a unit although there is no octroi in the state.Thus, the total burden of state government tax on electricity is 44 paisa per unit for industrial consumers and 56 paisa for domestic and other consumers. Nothing can be more unfortunate than this,laments P D Sharma, president, Apex Chamber of Commerce and Industry(Punjab). He said the Centre has formulated a scheme under which all state taxes have to be refunded to the exporters.Among these taxes, electricity duty is prominently placed. The commerce ministry has estimated that the burden of state taxes on an average accounts for 3.5% burden on the value of export. In the scheme, the central government has provided that in case the states do not refund these taxes, the Centre will adjust these against the allocations to the respective states. In Punjab, Mr Sharma said industry mostly depends upon exports which may be direct or indirect.This means the state government has perforce to return the duty. Apart from this provision the duty burden from 11 paisa to 44 paisa is a very huge amount.Punjab started new power projects in 1980 on a very high scale.Even at that time the duty on electricity was not raised.He felt that at this juncture the Punjab government has come down upon the the power consumers heavily by its grossly wrong policies on power. Therefore, he said the chamber which represents a cross section of the industry in the state is of the opinion that the state government should take steps to reduced the duty to the old specific rates to lessen the burden. Mr Sharma also lamented that the Punjab State Electricity Board (PSEB) was contemplating to have its own police for tackling power theft.This issue was raised in the past also and the government had to withdraw.Stating that this provision has the potential of mischief Mr Sharma indicated that the normal laws are adequate enough to check power theft.PSEB has already provided for very heavy penalties for power thefts and there is hardly any need to set up its own police force.This is “ a dangerous move and industry opposes it strongly,” he said. Meanwhile, the Punjab government on Saturday decided not to collect electricity bills from existing industrial units in advance in the state.This has come as a relief to the industry.The government has clarified that the first review of security (consumption) would be undertaken for the existing consumers by the PSEB in 12 months after the issue of tariff order for 2008-09.