IL Feature

Winds of Change


The state cabinet has decided that ministers would pay their own income tax on salaries and allowances. This move overturns a 1972 rule that exempted ministers from paying their own taxes on salaries and allowances. The chief minister has introduced a series of other reforms that are quite radical


 

Madhya Pradesh Chief Minister Mohan Yadav is a man in a hurry and also on a mission. His most dramatic reform is the one on tax to be paid by ministers. The move marks a significant change in policy, aimed at giving more financial responsibility to state officials.

“We have decided that our ministers will pay their own income tax and will not take any financial assistance from the government. So, the 1972 rule is being amended,” said Yadav after a cabinet meeting. 

The 1972 Act ruled that: “No income tax shall be levied on any Minister, Minister of State, Deputy Minister, or Parliamentary Secretary for all allowances payable to them, for the facility of a furnished residence provided without payment of rent, and for other perquisites permissible to them under this Act.”

It is noteworthy that Yadav has ended the tradition of not depositing income tax of the Chief minister and ministers from the government treasury, but that decision does not include the Speaker, the Deputy Speaker and the Leader of the Opposition in the state because a separate law has been made for them by the Madhya Pradesh assembly.

This exemption was also given to the Speaker, the Deputy Speaker and the Leader of the Opposition through an ordinance in 1997 and later by bringing a bill in the state assembly. Section 8(a) of the Madhya Pradesh Speaker and Deputy Speaker (Salary and Allowances) Act, 1972, was amended and implemented from January 1, 1994. When this bill was brought in the state assembly, the BJP was in the opposition, but no member of the party opposed it. 

Since 2003, all these benefits have been received by the state ministers, Chief Minister, Speaker, Deputy Speaker and Leader of the Opposition. By amending Section 8(a) of the Madhya Pradesh Speaker and Deputy Speaker (Salaries and Allowances) Act, 1972, a provision was made that income tax will not be levied on the emoluments, including allowances received by the Speaker, the Deputy Speaker and the Leader of the Opposition of the Madhya Pradesh legislative assembly. 

There is a provision of Rs one crore in the state budget for depositing the income tax of Chief Minister, Speaker, the Leader of the Opposition, ministers, Deputy Speaker and ministers of state. This amount was returned by the department after assessing the taxable amount and deducting tax from the respective salaries. 

In Madhya Pradesh, the salary and allowances of the Chief Minister is around Rs two lakh. Cabinet ministers get salaries and allowances of Rs 1.70 lakh. State ministers get Rs 1.45 lakh per month and MLAs get Rs 1.10 lakh per month. This includes basic salary, hospitality allowance, constituency allowance and daily allowance.

Other decisions taken by the state cabinet include:

  • Fifty percent of the assistance amount (Rs one crore) given on martyrdom of a jawan of the Army, central police and security forces as well as police in the state will be given to the wife or the spouse. Till now, 100 percent was given to the spouse while many parents used to suffer.

  • A provision for employment in soil testing was approved. This will benefit the young people in the state who have a background in agriculture. These soil testing laboratories will be started in all 313 blocks of the state.

  • Till now, trees were planted on 10 acres of land under the CSR guidelines. Now, the limit of 10 acres has been abolished and it has been reduced to a minimum of one acre which will benefit the state and small land owners.

  • Students studying in Sainik schools will get the benefit of scholarships.

  • The transport department used to look after the monitoring of railway projects, but now the entire work will be done by the public works department.

  • The Madhya Pradesh Correctional Services and Prison Bill, 2024, was also approved at the cabinet meeting. New jails will now be built in Sagar, Bhind, Damoh, Chhatarpur, Ratlam, Mandsaur and Betul. The Bill also includes measures for the reform and rehabilitation of prisoners.

  • Before Madhya Pradesh, in 2019, the Uttar Pradesh cabinet had made the decision to change the law that exempted the Chief Minister and other ministers from paying their income tax. In 2022, the Himachal Pradesh cabinet also expressed that all ministers and MLAs shall pay their own income tax. 

 

—By Adarsh Kumar and India Legal Bureau