Chandigarh, December 30
To check the flight of industry from the State, the Punjab Government appears to have achieved a major breakthrough in convincing the Union Government to extend the tax holiday cover to the state at par with neighbouring Himachal Pradesh. The tax holiday period, like Himachal Pradesh, would be for 10 years.
The Punjab Government is keen that the tax holiday plan should be in place well before the new Value Added Tax (VAT) regime comes in place from April 1 next year.
The Punjab Chief Minister, Capt Amarinder Singh, who flew to the Union Capital this morning, for high-level meetings, sources said, has come back with a promise of getting tax holiday for the state. Modalities, sources, point out, would be worked out before various schemes already notified under Finance Bills of 2002 and 2003 are extended to Punjab.
The Chief Minister has reportedly convinced the Central leadership that unless industrialisation is stepped up, Punjab will be in for a major economic crisis because of shrinking land holdings and agriculture becoming unremunerative because of the stiff international competition and reducing subsidies.
Once through, the tax holiday will not only help develop special export zones in different parts of the state but also facilitate setting up a chain of multiplexes in major towns and cities. The holiday will also attract IT industry to both Mohali and the proposed Quark
city. Besides IT, the state is also keen to catch the BT boom in time for solving the growing problem of unemployment.
The state government, say sources, is
keen to develop Mohali on the lines of Gurgaon.
Once in place, the tax holiday will encourage investments in industrial infrastructure as well as in entertainment sector where various concessions will be available for periods varying between five and 10 years.
Export processing zone, integrated infrastructure development or industrial growth centres, industrial estates, parks or software technology parks, as notified by the government will be allowed 100% deduction of the profits of the undertaking for five years in the State and thereafter 25% (30% for companies) for the next five assessment years. Similar deduction will be available to thrust section industries as specified in the 14th Schedule of the Income Tax Act.
The benefit of tax deduction under certain sections of the Income Tax Act , which are available to the communication services, may also be extended to radio-paging and domestic satellite services in the state. However, in the case of domestic satellite services, the deduction is allowable to only those Indian companies which own and operate satellites. The tax holiday to internet service and broadband service providers may also be extended to Punjab industry.
Since the Punjab Government has been emphasising the growth of Information Technology industry by inviting various multinational companies, including Tata Consultancy Services and Infosys besides the Quark, it wants that investors should not shy away from the state for lack of infrastructure or tax holiday support.
At one stage, the state had threatened to levy entry tax on goods which are manufactured by industry in Himachal or Uttaranchal that moved from Punjab.
