Area-based tax exemption encourages industries to migrate to Himachal Pradesh

Punjab government looks forward to oppose the Centre’s 2003 area-based tax exemption scheme to Supreme Court, as the policy results in jobs as well as revenue losses and migration of 90% industries to nearby Himachal Pradesh.

Punjab government claims that excise revenue has dropped by a third since area-based exemptions were introduced in 2003 and such breaks were against Article 303 of the Constitution.

Article 303 says neither Parliament nor a state legislature has the power “to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule” of the Constitution.

V K Janjua, Industry Secretary, Punjab, told Business Standard, “Our central excise revenues were over Rs 3,000 crore in 2001-02 and dropped below Rs 800 crore in 2006-07 mainly because of migration of units from Punjab to nearby tax-exempt states…We are losing out on generating employment opportunities, stamp duty fees and other aspects related to the growth of industrialisation.”

Punjab is the first state to drag Centre government to court for this matter.

Via: Business Standard

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  1. says: Disha Singh

    UPDATE: States, which enjoy area-based tax exemption on new investments, have hit back at the plans of the Punjab government to seek legal remedy to check migration of investments from the state to the tax-free states.

    Calling the central package a “well deserved” one, the industry and government representatives of Himachal Pradesh and Uttarakhand felt that it is in tune with the constitutional rights of the central government… CLICK HERE TO READ MORE

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