Gujarat government seeks rollback of Income Tax on Urban Authorities

Ahmedabad, DeshGujarat

Chief Minister Anandiben Patel led Gujarat Government has demanded exemption from the income tax levied on the revenues of the Urban Development Authorities(like Ahmedabad Development Authority etc.,) as they are not in to any business activities but ploughing back their earnings for the betterment of the public only.

Gujarat Government has written to the Union Ministry of Finance and the Income Tax Authorities recently to roll back the tax on the urban development authorities. In an official letter Gujarat government said, “Gujarat is one of the most urbanized states, with 42% of the population in urban areas, people from all over India flock to the towns of Gujarat for employment. Planned urban development has been made possible by the effective functioning of urban Development authorities in Gujarat. These Authorities enjoyed complete exemption on income U/S 10(20A) of the Income Tax Act, 1961 till 2002-03. With effect from 01-04-2003, the income of Urban Development Authority became taxable. Subsequently, the Urban Development Authorities got registered for exemption U/S 12A since their activities constituted the “advancement of any other object of general public utility.” However, with the amendment of section 2(15) with effect from 01-04-2009, the entire income of Urban Development Authorities is sought to be brought in the tax net.”

“Urban Development Authorities are statutory authorities and performing planning and development functions. Their activities cannot be termed as being in the nature of trade, commerce or business. Infact, taxation of these Urban Development Authorities take away the revenues that were hitherto available for development works in the growing urban Development Authorities should be covered by the proviso to section 2(15) of the Income Tax Act, 1961. We seek suitable modifications in the tax laws for this purpose. This would enable Urban Development Authorities to become more financially viable.”, Gujarat Government appealed to the Union Government.

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