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Entry tax revival spooks industry

Calcutta, March 23: The entry tax on goods crossing over to Bengal is set to return after a little over a decade, drawing cries of disappointment from industry that dubbed the levy hassle-creator, corruption-multiplier and inflation-feeder.

Finance minister Amit Mitra did not specify the entry tax rate but said such a levy was needed to build and maintain infrastructure. Such a tax was in existence during the Left regime but it was abolished over 10 years ago.

Mitra said a compensatory entry tax fund would be created from the proceeds to meet the expenses of building and maintaining new roads.

“In order to meet up such cost for facilitating trade and industry in the state, I propose to introduce a new bill for levy of tax on entry of goods into local areas of the state and thereby creating a compensatory entry tax fund,” he said in the budget.

“It is a highly hassle-creating exercise,” said D.P. Nag, the secretary of the Bengal National Chamber of Commerce and Industry.

Bharat Chamber of Commerce president Ashok Aikat felt the levy was a “retrograde” step and against the tenet of the value added tax and the proposed goods and services tax.

Asked at the post-budget media conference whether the entry tax would increase cost, chief minister Mamata Banerjee fielded the question on behalf of the finance minister.

The chief minister denied that cost of all items brought in from other states would go up. She said many other states were collecting it when Bengal’s goods reach there. Hence, this state also has the right to levy tax on items coming from other states.

Surya Kanta Mishra, the leader of the Opposition, said the Left Front had abolished it after weighing various aspects.

Trade bodies said the state did not have the infrastructure to collect the tax. Such a levy had earlier caused congestion at border check posts, compelling trucks to wait for hours.

“When efforts are being made to make the flow of goods across the states seamless, entry tax is a move in the opposite direction. This will also indirectly burden the people with higher prices as traders will pass it on,” a member of a trade body said.

The entry tax in its earlier avatar was also pilloried for opening an additional avenue for corruption as some officials took bribes and let the goods enter, robbing the government of revenue.

Amnesty scheme

Mitra announced an amnesty scheme for traders who should pay tax and register themselves but have avoided doing so far. The scheme will be open till December 31, 2012.

“Such dealers will be given a last opportunity to declare their liability and seek registration on payment of only a certain percentage of their declared taxable turnover. No interest and penalty shall be charged for the undisclosed liability and failure of the dealer to get registered. I am hopeful that the unregistered dealers will come forward to take this opportunity and do their business openly in a lawful manner,” Mitra said.

Property registration

Mitra has sought to plug a loophole in deals between land owners and developers. A voluntary scheme will be put in place to register an agreement between the owner of a piece of land and the developer/ promoter by paying a nominal stamp duty. Such statutory provision already exists for agreements on purchase of houses and flats.

Those who choose not to use the new option may continue with the current dispensation, the minister said. The provision for power of attorney has been similarly aligned, he added.

The government has decided to launch an advance queue management system to help those registering property. People will be able to follow the process on display boards in registration offices. An SMS will be forwarded from the system to the particular person when the deed is ready for delivery.

The system will be introduced first in the office of the Alipore district sub-registrar from June.

An e-stamping system will be introduced through net banking and bank counters to prevent the use of fake non-judicial stamp papers while registering property.