Pandemic relief: UP govt exempts industrial areas from double taxation

Earlier, industries falling under the jurisdiction of UPSIDA, were subject to tax/user charges levied by the nodal industrial development agency and the local district panchayat

In a major relief to the manufacturing sector amid the coronavirus (Covid-19) pandemic and the consequent negative impact, the Uttar Pradesh government has exempted the industrial areas from double taxation.

Earlier, the industries falling under the jurisdiction of the UP State Industrial Development Authority (UPSIDA), were subject to tax/user charges levied by the nodal industrial development agency apart from the local district panchayat.

On September 21, 2020, the crucial issue of double taxation/user charge was vehemently raised by the representatives of various industrial associations during the high-level empowered committee meeting of ‘Invest UP’ in Lucknow, chaired by Chief Minister Adityanath.

Later, the CM directed senior officials to quickly resolve the issue through a fair and transparent utilisation of tax for the maintenance of facilities in these industrial areas. Subsequently, the state evolved a fresh formula for the devolution of tax/user charges between the industry and local panchayat body in the ratio of 60:40.

In its Government Order (GO), issued by the state panchayati raj department, the government has now asked all the divisional commissioners and district magistrates to ensure that 60 per cent of the tax or maintenance charge revenue is utilised in the development of public utilities inside the industrial areas.

The remaining 40 per cent of the tax will be utilised in the development of the local zila panchayat area falling outside the industrial hub.

 

UP Additional Chief Secretary, infrastructure & industrial development, Alok Kumar said it was a long pending demand of the industrial associations, which has been resolved by the state government.

“The utilisation of tax amount in the same industrial area, in which the tax is collected, would result in higher tax compliance and more funds would be available for development and maintenance of industrial areas,” he claimed.

The state has also directed that the tax and maintenance charges be deposited in a separate account to ensure transparency and timely utilisation of funds for providing public utilities in the industrial areas inside the zila panchayat jurisdiction, particularly in the areas of UPSIDA.

Following the Covid-19 lockdown, the Adityanath government has been taking a series of steps to kick-start the economy, particularly the industrial and manufacturing sectors by providing various incentives and sops to the beleaguered micro, small and medium enterprises (MSME).

According to UP MSME and Export Promotion Minister Sidharth Nath Singh, the state was in the process of rationalising investment and export promotion policies to attract companies exiting China owing to the resentment over the outbreak of Covid-19

The UP government is targetting MSME exports to touch Rs 3 trillion in the next three years. During the previous 2018-19 and 2019-20 fiscal years, the MSME exports from the state were to the tune of Rs 1.14 trillion and Rs 1.20 trillion, respectively.