White Paper on Indian States (1950)/Part 9/Miscellaneous Matters
Miscellaneous Matters
197. The Committee's recommendations covered also a range of miscellaneous matters of which the most important are set out below.
(1) Income-tax.—Apart from the question of the rates of income-tax in merged States and in federating States and Unions, the Committee has made various recommendations of a technical character[1] which are under separate examination. Action concerning those which relate to merged States has been completed; and those relating to the federating States and Unions will soon be taken up.
(2) Staff in "Federal" Departments.—In paragraph 11 (1) of Part II of its Report, the Committee recommended that—
"(1) The permanent staff wholly (or substantially) engaged on work connected with "federal" subjects in States on the prescribed date should be taken over by the Centre in appropriate grades and upon terms not less advantageous than in the service of the States. Temporary staff so engaged should also be similarly absorbed so far as possible, having due regard to their suitability. The States attach considerable importance to this point, and would be glad to release all such staff consistent, of course, with their own requirements in those departments (such as Excise) where the subjects dealt with are both "federal" and "Provincial"……"
This was a very important recommendation and has been accepted without reserve.
(3) Cessation of "Federal" rights and Immunities:—
This is another important subject upon which the Committee recommended as follows, in paragraph 11(2) of Part II of its Report:—
"With effect from the prescribed date, all 'rights and immunities' enjoyed or claimed by the States, whether expressly or by usage, and whether relating to 'federal' revenues and taxes generally (present or future), or to specific matters such as Railways, Customs, Posts and Telegraphs, Opium, Salt, etc. will terminate and must be extinguished. Thereafter, their constitutional position in respect of these matters should be the same as that of Provinces under the new Constitution of India.
All existing arrangements with individual States for pooling, sharing, division or apportionment of 'federal' revenues, taxes and receipts, e.g., Customs, Central Excise, Railway revenues of 'worked lines', interest on Railway 'loans' (whether with or without a share of profits), Salt Duty 'compensations', Opium 'royalties', Telegraphs receipts—and all existing forms of ad hoc payments and subsidies in respect of 'federal' matters should terminate on the prescribed date".
(4) Date of Integration.—The Committee recommended that federal financial integration should become effective from 1st April 1950. This has been accepted in all cases except PEPSU, where 13th April 1950—the commencement of its next financial year—has been agreed as the date for this purpose.
(5) Banking and Treasury Arrangements.—These will have to be reviewed in all States with a view to bringing them into line with the arrangements in vogue in the Provinces.
(6) Ways and Means.—All payments arising out of federal financial integration which the Centre may have to make to the States—whether by way of guaranteed subvention or other payments outside the guarantees—will be made in quarterly instalments in advance. Otherwise, the Ways and Means problem will cause them serious embarrassment.
- ↑ Annexure to Part I of the Committee's Report.