In a bid to bolster the financial health of local self-governing bodies, the Goa State Finance Commission (GSFC) is considering the introduction of a ‘Professional Tax.’ This proposed levy targets professionals operating within the jurisdictions of civic bodies and panchayats, aiming to address the growing expenditure of these bodies without a commensurate increase in revenue sources.
The financial strain faced by Goa’s local bodies, including the Corporation of the City of Panaji (CCP), has prompted the GSFC to explore innovative revenue-generation measures. While a handful of coastal panchayats stand as exceptions, most local bodies operate in the red and rely on financial assistance from the State government through grants.
The potential impact of the proposed ‘Professional Tax‘ extends to a range of professionals, including chartered accountants, lawyers, doctors, dentists, architects, and engineers, who have offices or conduct business within the purview of these local bodies.
Professional tax is a state-level levy imposed by the state government on individuals and professionals, contingent on the income derived from their respective professions, trades, and employments, surpassing a specified threshold. Article 276 of the constitution empowers state governments to impose this tax, with a maximum limit of ₹2500. Professional tax cannot exceed this cap. This tax serves as a vital revenue stream for the state government, operating in accordance with state laws. The funds collected are allocated towards the maintenance and advancement of the state’s infrastructure and development initiatives.
The following categories of legal persons are liable to pay professional tax: –
Insurance agents
Hindu Undivided Family
Lawyers and legal practitioners
Chartered Accountant
Limited Liability Partnership
Surveyors
Contractors
Companies and Business Firms
Tax Consultants
Architects
Co-operative Societies and Associations
Company Secretary
Doctors
Retired IAS officer Daulat Hawaldar, former State finance secretary, leads the GSFC and has been instrumental in the contemplation of this taxation strategy. The proposal gained traction during a recent meeting between GSFC officials and members of the Goa Chamber of Commerce and Industry (GCCI). During the deliberations, the GCCI recommended a focus on expanding the tax base instead of introducing new taxes.
The move towards a ‘Professional Tax’ is seen as a proactive step by the GSFC to ensure the financial sustainability of local bodies, fostering a sense of fiscal responsibility among professionals operating within their jurisdictions.
As discussions progress, stakeholders await further developments and hope for a balanced approach that addresses the fiscal challenges faced by local bodies while considering the concerns of the business community.
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