Share of Punjab Municipal Fund in VAT enhanced to 11% from 10%?

While making payment of VAT under Punjab VAT Act, payment of VAT(excluding surcharge) has to be made in two parts i.e 10% of VAT in the account of "Punjab Municipal Fund" and 90% in the account of "Excise and Taxation Officer". 

Whereas surcharge is required to be deposited  in two parts i.e 80% in the account of "Excise and Taxation Officer" and 20% of surcharge in the account of "Punjab Municipal Infrastructure Developmenmt Fund". However a single challan namely VAT-2AE is being used for all the payments in different heads.

Now surprisingly the form challan VAT-2AE has been amended by the State Bank of India on its online VAT e-payment facility to the effect that the VAT is bifurcated into 89% in ETO's account and 11% in PMF's account, whereas surcharge is being bifurcated in the same ratio as earlier i.e 80% in ETO's account and 20% in PMIDF's account.

There has been no corresponding notification amending VAT-2AE visible on the official website of the Excise and Taxation Department, Punjab to this effect as yet. It raises a question whether VAT-2AE has been amended?

Earlier there was a news in Hindustan Times on 30th April, 2012 that Punjab Cabinet would enhance the rate of share of local bodies in VAT from 10% to 11% to compensate the local bodies after the abolition of octroi from Petrol and Diesel.

The question now is whether a dealer while depositing VAT should also deposit VAT in the ratio of 89% and 11% as being done by SBI in its online payment facility or should continue depositing in the earlier ratio of 90% and 10%.

If the VAT-2AE has been amended by the Punjab Govt. without giving any public notice or making available relevant  notification, if any to this effect to the general public, then this raises serious question mark on the working of the Department as well as the Punjab Govt. 

The relevant news as being published in the Hindustan Times on 30-04-2012 is being reproduced herebelow for ready reference of the readers:

Punjab cabinet approves to abolish octroi on petrol, diesel

In a significant decision, the Punjab cabinet on Monday approved to abolish octroi on petrol and diesel in the state. A decision to this effect was taken in a meeting of council of ministers held under the Chairmanship of Punjab chief minister Parkash Singh Badal here on Monday evening.

An official spokesman said the cabinet also gave nod for the requisite amendments in the Punjab Municipal Act, 1911, Punjab Municipal Corporation Act, 1976 and Punjab Municipal Fund Act, 2006.

The state government would issue required ordinances in this regard immediately. The state government had already abolished octroi on all items except electricity, petrol and diesel with effect from September 1, 2006.

"Levy of octroi of petrol and diesel was adversely affecting the sale of these products in urban areas of the state, which were adjacent to other states, because the rate of these products in the neighbouring states was much less," the spokesman said.

"Therefore there is a need to abolish octroi on petrol and diesel which is currently charged at the rate of 1% and 2% on diesel. Hence the amendment to the Punjab Municipal Act, 1911 has been proposed," he added.

The state government would compensate the local government department by enhancing the share of local bodies in the VAT from existing 10% to 11% which would offset the revenue loss following the abolition of octroi.

To enable the panchayats to give land to government departments, boards and corporations for implementation of projects of public importance, the cabinet also decided to remove the condition on the panchayat retaining 50% of cultivable land available with it after sale, gift or exchange as provided under Section 5 of Punjab Village Common Lands (Regulation) Act, 1961.
The state government would soon issue ordinance in this regard after following due legal procedure.
In another significant decision, the cabinet also decided that no retired official of the state government except the PCS would be re-employed in any form in future.

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