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Service tax exemption regions
May, 01st 2010

Bowing to pressure, Union Finance Minister Pranab Mukherjee announced exemption of service tax on domestic air travel to and from the NE region.

Replying to a discussion on the Finance Bill 2010, Mukherjee said the effective rates of levy, when they come into effect, would be a maximum of Rs 100 per travel for domestic journey in any class and a maximum of Rs 500 per travel for international journey by economy class. Further, domestic air travel to and from the NE sector would be exempt even from this moderate tax, he declared.

Since I proposed imposition of service tax on international and domestic air passengers in the Budget this year, I have received a number of representations expressing concern that this levy would adversely affect the civil aviation sector and would make air travel prohibitive. I would like to clarify that it would not be so. It would not be linked with the percentage of the fare, he said.

However, that was about the only announcement, the Union Finance Minister had to make concerning North-East, prompting the Opposition to cry foul.

Meanwhile, the UPA Government came under attack of the Opposition in Rajya Sabha for dilution of the incentives given under the North East Industrial and Investment Promotion Policy - 2007 (NEIIPP).

While Asom Gana Parishad (AGP) MP Kumar Deepak Das alleged decline in investment, AUDF MP Badruddin Ajmal took on the Congress Party accusing it of ignoring the interest of the poor in Assam in the Lok Sabha on Thursday.

Participating in the discussion on Appropriation Bill, 2010 in Rajya Sabha, Das charged that the Budget has ignored North Eastern regions share. The Budget failed to restore the sanctity of NEIIPP 2007 that got shattered because of dilution of some incentive originally extended to it. Necessary corrective steps need to be taken, he said.

The Budget has increased the rate of Minimum Alternative Tax (MAT) by three per cent. It will act as disincentive for companies located in the North Eastern region.

In the Budget speech of 2010, the Finance Minister failed to utter a single word about Assam or North-East, he said.

There is only vision, but no reality for Assam or North East Region. The Budget proposed special focus on agriculture, as an amount of Rs. 400 crore has been provided to extend the green revolution to the Eastern Region. It is disheartening to note that Assam was not included in the green revolution process, he said.

The State Governments are not utilising the funds properly in the North Eastern region and the State Governments have very poor record of fund utilisation, he alleged.

Meanwhile, two days after voting for the UPA Government in the Parliament, Budruddin Ajmal attacked the Congress Party, complaining of complacent attitude of Assam Government towards granting land patta to the poor in the State.

Participating in the discussion on the Finance Bill 2010, amidst taunts from rival BJP, Ajmal took a swipe at the Congress party.

Punching holes at the implementation of the UPA Governments flagship NREGA programme, he said there is corruption in execution of the scheme. Money does not reach the poor, he claimed.

Referring to Assam, he said floods and erosion have devastated the State. He called for declaration of the flood and erosion problems as national disaster. Congress President Sonia Gandhi and Finance Minister Pranab Mukherjee were among senior UPA leaders, who were present.

Taking pot shots at Tarun Gogoi Government, he said the poor in the State were suffering because the State Government has stopped issuing land patta. Assam Government has not given patta to the poor and as a result of this they do not get loans from banks, he complained.

In his brief speech, marked by frequent intervention by BJP, he also demanded a bridge over Brahmaputra river in Dhubri.

On Tuesday, Ajmal after a call from political secretary to Congress president, Ahmed Patel voted for the UPA Government in the crucial voting on the Demands for Grants. He later told this newspaper that he voted for the UPA Government because he could vote alongside BJP.

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