NCR industries opt for HP, Uttarakhand: Assocham
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Last Updated: Tuesday, October 13, 2009, 18:56
Dehradun: A number of small industrial units from the National Capital Region (NCR) have expanded base in Himachal Pradesh and Uttarakhand in the last 2-4 years to cash in on attractive tax breaks and other incentives there, a survey by industry body Assocham has said.

The survey named 'Shifting of Industrial Units from NCR to neighbouring States' also highlighted that Uttar Pradesh is yet to be considered by industries for their operations, while Haryana and Punjab are perceived as saturated by industrial enterprises.

The survey, which covered over 500 small and medium sized industrial units, reveals that a whopping majority of 75 per cent of the respondents were eager to grab tax holiday schemes ranging from 7-10 years and lower local levies extended to them by Himachal Pradesh and Uttarakhand.

"It is because of this reason that a vast majority of industrial units in 2007 and 2008 chose to widen their base in these states instead of expanding their capacities elsewhere," it said. Piramal also said it was time for "quick disinvestment" of profit-making public sector enterprises (PSUs) as it would "immediately" help soften interest rates and assist fiscal management.

"(The government should) allow disinvestment in PSUs to raise Rs 30,000 crore," Piramal said.

The government has estimated fiscal deficit at 6.8 per cent for 2009-10.

Commenting on the Draft Tax Code (DTC) Piramal said, "in theory it is very good but there are 2-3 things, about which the industry is worried."

She said the government should drop the proposal to introduce Minimum Alternate Tax in DTC on assets as it is like levying wealth tax on loss making companies.

MAT is more like wealth tax to be paid even by loss making companies, those that are yet to start business and even on assets yet to be put to use, she added.

DTC, which will replace the Income Tax Act, 1961 after approval by Parliament, proposed to impose Minimum Alternate Tax on assets instead of book profit.

On implementation of Goods and Services Tax (GST), the President said it should be implemented at a flat rate of 12 per cent by April 2010.

Piramal further said there is a need to reduce the key policy rates like repo (rate at which RBI lends to banks) and reverse repo (rate at which RBI borrows from banks) by 50 basis points.

Bureau Report

First Published: Tuesday, October 13, 2009, 18:56

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