FM opposes extension of tax exemptions to industries
May, 31st 2008
Finance Minister P Chidambaram on Friday opposed the extension of tax exemptions to industries, stating that he has already turned down some proposals in this regard.
"I would be happy if the tax exemptions come to an end on the day of sunset clause" he told media persons in New Delhi.
Notably, Commerce Minister Kamal Nath has been supporting the demand of Export Oriented Units (EOUs) for extension of tax holiday beyond 2010.
The Finance Ministry has already extended the tax holiday for units set up in Software Technology Park of India (STPI) till 2010.
Expressing concern over sluggish growth in tax collections, he said that due to area-based tax exemptions, there was no one to one link between industrial growth and excise collections.
In Himachal Pradesh and Uttarakhand, the new units which are set up before March 31, 2010, have been granted tax holiday, including corporate tax holiday and excise duty exemption, by the central government.
When asked, Chidambaram said for instance, that food processing industry could grow at a high rate, but would have no impact on excise collections due to tax exemption.
According to Union Budget 2008-09, government lost over Rs 45,000 crore in 2007-08 due to various tax exemptions to the industry. It included about Rs 12,000 crore under STPI tax exemptions and about Rs 3,000 crore in area-based exemptions to Himachal Pradesh, Uttarakhand and northeastern states.
When asked, he said the production based excise collections from Gutka manufacturers would be made mandatory considering it "a special case" but it would not be extended to other industries.