State will no longer pay income tax for ministers as Madhya Pradesh cabinet strikes down 1972 rule

“The Chief Minister proposed that ministers should pay their own income taxes on allowances, rather than the state government covering these taxes. The Cabinet has decided to end the provision allowing the state to pay these taxes,” Vijayvargiya said.

The Congress criticised the BJP government’s move, with the party’s state president Jitu Patwari saying the government should actually be curbing wasteful expenditure on “purchasing aeroplanes, decorating official bungalows, and buying luxury cars”.

According to section 9K of the Madhya Pradesh Ministers (Salary and Allowances) Act, “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.”

“The income tax, as applicable, shall be payable by the State Government at the maximum rate payable by a Minister, Minister of State, Deputy Minister, or Parliamentary Secretary,” the Act read.

Officials from the Finance department said the law was enacted to ensure “ministers from poor backgrounds did not have to bear income tax burden”.

With this practice coming to an end, officials said there would be “direct financial savings for the state”, leading to “better allocation of resources towards development projects and public services”.

An official said, “Ministers paying their own taxes fosters a culture of responsibility and aligns with public expectations of transparency in governance. This will also reduce unnecessary expenditure from the state Budget, allowing funds to be redirected to other essential services and development projects. The state is currently reeling from financial burden…”

There are other states that have in the past amended provisions exempting ministers from paying tax. In 2019, the Uttar Pradesh Cabinet decided to amend the law that exempted the Chief Minister and other ministers from paying their own income tax.

The Himachal Pradesh Cabinet had in 2022 also said that all ministers and MLAs would pay their own income tax, which was till then being paid by the state government.