Centre not to extend Kutch tax holiday

Putting an end to the uncertainty on the issue of tax holiday for Kutch, Union finance minister P Chidambaram has said in the parliament the concession given by the Centre to Kutch district expires on December 31, 2004, and there is no move to extend it.

Replying to a question by Pushpadan Gadhvi, member of Parliament from Kutch, the minister said as the purpose of the tax holiday was to attract immediate fresh investment, the requests for extending the period beyond December 31, 2004, were not agreed to, as it would have defeated the very purpose of the exemptions.

Earlier, immediately after the Union finance minister's Budget speech, the Gujarat government had approached the Union government, seeking a clarification weather tax holiday had been extended for Kutch as well.

While the finance minister said in his speech all backward areas apart from Jammu and Kashmir and the Northeast, which are currently enjoying tax holidays would be eligible for an extension up to March 31, 2007, no mention of Kutch was made.

On August 20, Gadhvi asked in Parliament weather the Centre had received representations for tax holiday exemptions from Gujarat, weather the matter is under consideration and by what time a decision is likely to be taken.

In reply, Chidambaram said while representations had been received by the Centre, the package has not been extended. Gadhvi said in a statement here the United Progressive Alliance (UPA) government's decision not to extend tax holiday to Kutch amounts to injustice to Gujarat.

Gadhvi said while fresh investments would not come in, the trade and industry community of Kutch has been disappointed by the move.

Gujarat had made a forceful plea ahead of the Budget that tax concessions to Kutch be extended till December 31, 2006. Chief minister Narendra Modi, Gujarat Chamber of Commerce and Industry and other industries bodies also had demanded this incentive.

Following the earthquake, a special package had been announced for speedy growth of the region. The special incentives were originally effective from July 31, 2001, to July 31, 2003, but these were extended to December 2004.

GCCI president Chinubhai Shah had in a representation made to the Union finance minister, requested the government to continue excise benefits to new industries.