UP’s tax challenge for Jaypee’s F1

Dec 13 2012, 10:36 IST
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SummaryJaypee group, the owner of the Buddh International Circuit that hosts the F1 race near Delhi, is in trouble again.

Jaypee group, the owner of the Buddh International Circuit that hosts the F1 race near Delhi, is in trouble again.

The Uttar Pradesh government’s newly-formed Resource Committee has raised objections to the 100% entertainment tax exemption granted to the event and decided that it be stopped immediately. The panel wants the event be taxed heavily.

Taking strong objection to the tax exemption, the chairperson of the committee, Md Azam Khan, felt that on account of this the state was losing crores in revenue.

“The exemption should be lifted immediately and the event should be taxed heavily as those who are going to view this event are buying tickets worth R20,000 to R25,000. Since the only the very well-heeled can afford this form of entertainment, there is no reason why they should be exempted from taxation,” said Khan.

The committee has been formed to look at ways to increase the state's revenue andthis was the panel's first meeting.

Even during the Mayawati government's rule, the issue of granting complete tax exemption to the event had met with opposition both from the Supreme Court as well as opposition parties, including the Samajwadi Party and the Bharatiya Janata Party.

In fact, the opposition had even targetted the Mayawati government for ''favouring'' the private company which has built the R2,000 crore Budh International circuit in Greater Noida.

The official state government’s stand was that it had not shown any undue favour to the organisers of the event and that whatever concessions were given were done so under a 2009 policy, which had sought to give certain incentives to investments in the state, especially in view of the fact that the global recession had started shrinking.

“Due to global recession, the state government had formulated a policy in May 2009 giving concessions and other facilities in taxes, fees, levies etc to all industrial development authorities, urban development authorities and large and medium scale development projects. Whatever concessions have been given to F1 organisers had been done so under a policy direction and are not a favour," the official said, adding that the then government on its part was clear that it had saw the race circuit like any other investment in the state.

Another official said the very fact that a prestigious international event like Formula 1 was being held in India for the first time and that UP was the host state, was a matter of pride.

“This event has been a platform for

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