Tax Simplification at the Core of New Bill

In a significant move to streamline the state’s tax collection system, the Punjab Legislative Assembly on July 14, 2025, unanimously passed two key financial bills: the Punjab State Development Tax (Amendment) Bill, 2025 and the Punjab Appropriation Acts (Repeal) Bill, 2025. Both bills were presented by Finance Minister Harpal Singh Cheema.

The amendment to the 2018 Act introduces a lump-sum payment option for taxpayers, aiming to ease compliance and improve efficiency in tax administration.

New Rs 2200 Lump-Sum Option for Taxpayers

Under the updated provisions, individuals liable to pay the Punjab State Development Tax can now choose to deposit Rs 2200 annually in one go, as opposed to monthly payments of Rs 200, which added up to Rs 2400 over the year.

“This initiative was developed after thorough discussions with Chief Minister Bhagwant Singh Mann. It is designed to offer convenience and flexibility to taxpayers, especially salaried individuals,” said Finance Minister Cheema while addressing the House.

The move effectively offers a Rs 200 concession per year for those opting for the one-time payment, in addition to reducing administrative burden for both the taxpayer and the government.

Legislative Consensus Amid Political Tensions

The amendment stands out not only for its content but also for its unanimous approval, a rare occurrence in Punjab’s politically divided assembly. The decision marks a moment of legislative harmony at a time when the political climate has been tense, as seen in recent public exchanges between Chief Minister Mann and Leader of Opposition Partap Singh Bajwa.

Potential Economic Impact

Though no formal studies have yet analyzed this policy shift in Punjab, research from institutions like the National Bureau of Economic Research suggests that lump-sum payment systems, when paired with clear benefits, can increase tax compliance by 10–15%.

Given the state’s ongoing efforts to stabilize its economy post-COVID-19, this step could play a meaningful role in enhancing revenue collection without placing additional burden on taxpayers.

Key Highlights:

• Bill Passed: Punjab State Development Tax (Amendment) Bill, 2025
• New Option: Rs 2200 one-time annual payment instead of Rs 200/month
• Effective From: FY 2025–26 (expected)
• Target Group: Salaried individuals and professionals under the 2018 Act
• Passed By: Unanimous voice vote in Punjab Assembly on July 14, 2025