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Demonetisation will hit commercial tax collection in Bihar and reduce reimbursement by the Centre following implementation of the GST Act, a senior state minister said today.
Replying to discussion on the Bihar Appropriation (No. 4) Bill, 2016 in the Assembly, Finance Minister Abdul Bari Siddique said, "Demonetisation will adversely affect commercial tax collection in Bihar following the scrapping of Rs 1,000 and Rs 500 notes by the Centre."
"It (demonetisation) will have a cascading effect on the financial health of Bihar as it has been proposed under the GST Act that reimbursement by the Centre will be in proportion to the quantum of commercial tax collection of any state," he said.
Siddique said the Bihar government would oppose the proposed formula for reimbursement of funds to the state on the basis of commercial tax collection.
"Our Commercial Tax Minister Bijendra Prasad Yadav will be going to Delhi later this week to take part in the GST council meeting where he will oppose the formula for transfer of funds to Bihar on the basis of commercial tax collection by the state at the end of the 2016-17 fiscal," he said.
When asked about the quantum of loss of commercial taxes on account of demonetisation, Yadav said the picture will become clear only after the data at the end of this fiscal is available.
He said the state government has set a target of Rs 22,000 crore for commercial tax collection this fiscal.
The Finance minister's statement on side effect of demonetisation assumed significance in the wake of Chief Minister Nitish Kumar's stand of backing the Centre's demonetisation move.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)