(a) Whether the status of State Maritime Boards has been excluded from the definition of
``Local Authority`` under the Finance Act, 2003;
(b) if so, the reasons therefor;
(c) whether some of the States have made representations to the Union Government for waiving
of income tax from the State Maritime Boards; and
(d) If so, the reaction of the Government thereto?
MINISTER OF STATE IN THE MINISTRY OF FINANCE:(SHRI S.S. PALANIMANICKAM)
(a) 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
State Maritime Boards thus went outside the scope of exemption available under
that section.
(b) 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.
(c) Yes, Sir.
(d) The request was examined and not found feasible.