(a) The reasons for imposing tax on State Maritime Board/Port Authorities;
(b) Whether the Union Government has received proposals from concerned States
to amend the Income Tax Act, 1961 to exclude the State Maritime Boards from the
purview of the Income Tax; and
(c) If so, the details thereof and the action taken by the Government thereon?
MINISTER OF STATE IN THE MINISTRY OF FINANCE:(SHRI S.S. PALANIMANICKAM)
(a) to (c): Vide Finance Act, 2002, definition of ‘local authority’ under
clause (20) of section 10 was made restrictive so as to include Panchayats,
Municipalities, Municipal Committee and District Boards and Cantonment Boards only.
This amendment was made effective from 1st April, 2003. Entities like Port Trust/State
Maritime Boards thus went outside the scope of exemption available under that section.
The above amendment was based on the recommendation of Advisory Group on Tax Policy
and Tax Administration for the Tenth Plan which had suggested deletion of exemption
provided under section 10(20) of the Income-tax Act. The restrictive definition was
adopted considering the need to phase out exemptions consistent with a moderate
tax regime. However, exemption in the case of Panchayats, Municipalities, Municipal
Committee etc. was retained as they are local self-government institutions.
Representations were received seeking restoration of the tax exemption for Port
Trust/State Maritime Board. These requests were examined and not found feasible.
The restrictive definition of the term ‘local authority’ was adopted considering the
need to phase out exemptions inconsistent with a moderate tax regime.
Policy imperatives currently being the same, revival of exemption to Port Trust/State
Maritime Board is not under consideration.