White Paper on Indian States (1950)/Part 9/Internal Customs Duties
Internal Customs Duties
192. The only States which now levy such duties are Hyderabad, Rajasthan, Madhya Bharat, Saurashtra and Vindhya Pradesh.
In regard to the first three, the Committee recommended varying periods, of three to five years, for the abolition of these duties and for their substitution by sales tax. In subsequent discussion with the representatives of these States, it was agreed that the period required would have to be 4 years in the case of Hyderabad and 5 years in Madhya Bharat and Rajasthan. These duties could doubtless be abolished even earlier, if the Centre could give some direct financial assistance; but present conditions render such a solution impracticable.
The Committee recommended the abolition of internal customs duties in Saurashtra and Vindhya Pradesh on 1st April 1950, and the grant of some small direct financial assistance to them by the Centre in that connection. Vindhya Pradesh agreed, but Saurashtra preferred gradual assistance; but present conditions render such a solution impracticable.
In no case will any "compensation" as such be payable.