The Empowered Committee (EC) of finance ministers of States demanded on Monday here that the upper limit on Professional tax, currently capped at Rs.2,500, be removed by amending the constitution.

The EC also decided to urge the centre to bring an end to “centrally sponsored schemes” and provide funds directly, along with suitable guidelines, to the States according to their needs.

“The committee has come to the conclusion that the upper limit of Rs 2,500 imposed by the Constitution in 1988 should be removed forever," Bihar Deputy Chief Minister and the EC Chairman, Sushil Kumar Modi told journalists here.

Article 276 of the constitution empowers the States to levy tax on professions. The article originally envisaged a cap of Rs.250 per annum.

Contending that incomes of professionals had increased manifold after 1998, Mr. Modi said removal of the upper limit on the Professional Tax would bring in more revenue to the States.

There is consensus on the issue among the EC members. We will urge the Centre to suitably amend the Constitution in this regard," said Mr. Modi.

The panel was also in favour of health and education funds to be transferred at the “state-level” as against the “district-level” so that funds could be included in the consolidated fund of the State concerned.

The EC also urged the centre to empower the States to impose the Value Added Tax on imports.


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