Meeting on tax sops for hill states today

For arresting the flight of industry to Uttaranchal, Uttar Pradesh has asked the Centre to withdraw the blanket exemption from central taxes given to the hill states and restrict those to areas 1,000 metres above the sea level.

UP also wants the districts within 100 km from the Uttaranchal border be given the same benefits as available to new units and units making expansion in Uttaranchal.

The Uttar Pradesh government will take up the matter before the parliamentary standing committee of the industries department tomorrow against the losses suffered by it due to special economic packages granted to the Uttaranchal.

Units from UP, particularly from eight districts bordering the hill state, were leaving in droves to take tax benefits in Uttaranchal.

In Uttaranchal, new units and those expanding are exempt from the central excise duty ranging from 8 per cent to 24 per cent and the income tax.

Industries in Uttaranchal will get exemption from the income tax for five years and 30 per cent exemption for the next five years. Units would also get central capital investment subsidy and central transport subsidy.

Tax concessions were granted to Uttaranchal till 2011, but following protests by UP, the Centre has brought it down to 2007.

The last meeting of the parliamentary committee headed by Congress MP Santosh Bagrodia was held on June 9. UP's chief secretary Neera Yadav, along with senior officials, will broach the case of UP before the committee.

The districts witnessing the flight of capital from UP are Saharanpur, Muzaffarnagar, Bijnor, Moradabad, Rampur, Amroha, Bareilly, and Pilibhit.

The UP government says similar benefits should be given to backward areas like Bundelkhand and eastern UP. It feels these areas are far more backward than Uttaranchal and population density is also much higher than in the hill state.

The Confederation of Indian Industry and Indian Industries Association have told the UP government that if immediate steps are not taken to remove the anomalies in exemption/incentives available in different states, the units will have no alternative but to shift from UP to places where special economic packages are available.