New CS hints at curbing tax breaks for IT

New CS hints at curbing tax breaks for IT

New CS hints at curbing tax breaks for IT

Newly appointed Chief Secretary Kaushik Mukherjee has said the state government will not henceforth encourage “unreasonable” tax breaks for the information technology (IT) sector.

In an interaction with Deccan Herald on Tuesday, Mukherjee said: “Both myself and the chief minister are not for giving unreasonable tax breaks. We will try to provide better infrastructure facilities and faster clearances of projects rather than giving tax breaks.”

Mukherjee will take charge as Chief Secretary on October 31 from S V Ranganath who retires on superannuation. The state government on Tuesday issued an official order appointing Mukherjee the next executive head of the Karnataka government.

The 58-year-old officer is now Additional Chief Secretary. He will retire in July 2015. Mukherjee said the IT industry is doing rather well, registering software exports close to Rs 1.35 lakh crore every financial year. Tax breaks are a thing of the past and such facility costs the State a “bomb.”

Now, the IT sector gets tax breaks on consumption of electricity and payment of stamp duty and entry tax on goods.

He said the government will try to promote “equality” among industries while defining policies.

Most taxes are levied to be paid. If breaks are given on a persistent basis then only companies benefit, leaving nothing to the government. The tax breaks will artifically bring down the costs of production but the selling price remains the same, thus helping private firms gain profits .

However, he did not say what exactly the government plans to do.  If a specific industry requests for a tax break, then perhaps the government may consider conceding its plea. But this will be on a case-by-case basis.

“But this will not be for everybody across the board,” he said. The government plans to urge the Centre to give Karnataka its due share of the export pie.

Despite the government spending a lot on infrastructure in cities, the state is not getting anything in return as the exports are not taxed, Mukherjee added.

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