Adopt cautious approach on area-based tax exemptions: TN

Tags: News
The Tamil Nadu government has asked the Centre to adopt a cautious approach on the 'complex issue' of providing area-based tax exemptions in the backdrop of the Andhra Pradesh State Reorganisation Act, 2014, saying such sops could affect the neighbouring state.

Chief Minister J Jayalalithaa has told Prime Minister Narendra Modi that the Centre has made a term of reference to the 14th Finance Commission on making recommendations on the resources that would be available to the successor or reorganised states on reorganisation of Andhra Pradesh in accordance with the Andhra Pradesh Reorganization Act, 2014.

It promised appropriate fiscal measures, including offer of tax incentives to promote industrialisation and economic growth in both the states, she said.

In a letter to Modi dated August 24, which was released today, Jayalalithaa said that as a neighbouring state, Tamil Nadu did not 'begrudge' benefits given to the two states, but the "nature and type of concessions have not been indicated in the Act and the matter appears to have been left to the discretion of the Government of India."

"The Andhra Pradesh State Re-organisation Act,2014,already contains a substantial and significant economic package. Hence, I strongly urge you to adopt a cautious approach to the complex issue of providing area-based tax concessions in the name of encouraging economic development in these two states."

"Such exemptions run counter to one of the basic thrusts of economic reforms — a rational tax policy that is neutral, encourages a common market in the country, rewards competitive efficiency, and exploits comparative advantage. Any shift of investments from states with a strong infrastructure and trained manpower to other states motivated by tax reliefs alone would undo the two decade long work of rationalisation of tax structures," she said while expressing her government's 'apprehensions' on the matter.

The CM recalled there was a 'spirited' debate on this issue at the National Development Council meet in 2005 during the UPA regime when 'almost all' Chief Ministers had favoured scrapping such exemptions as 'they significantly distorted the investment decisions of companies and corporate houses.'

EDITORIAL OF THE DAY

  • The Muslim Personal Law Application Act needs an overhaul

    Triple talaq or khola as means to divorce or dissolve one’s marriage in the Muslim community is unacceptable, as the Allahabad High Court judgment s

FC NEWSLETTER

Stay informed on our latest news!

TODAY'S COLUMNS

Sandeep Bamzai

<b>Disequilibrium:</b> THE GREAT GAMBLE

Finance it is said is merely a gun, politics is ...

BK Chaturvedi

Committed, yet miles to go

Swachh Bharat is a mission to which everyone is committed. ...

Rajgopal Nidamboor

Soul consciousness and reason

The soul, in the philosophical writings of ancient Greece, has ...