The Hindu Business Line : `Hard for ports to generate resources with meagre surplus'

WITH major ports generating lower net profits, there is a serious problem with regard to the ports' ability to fund development works themselves, said the Tuticorin Port Trust Chairman, Mr N.K. Raghupathy.

During 2003-04, the major ports generated a net profit of Rs 634 crore on an operating income of Rs 4,723 crore. The net surplus should be viewed in the context of the Rs 60,000-crore National Maritime Development programme planned for the next seven years.

It will be very difficult for ports to generate adequate resources with a meagre net surplus, he said at a seminar on tax-related issues in ports. It is a different matter that the Centre has allowed private sector investment to be used to augment infrastructure in ports.

Further, with 30 per cent of the net surplus going towards taxes, there is little left to the ports for planned and unplanned expenditure. This implies that either the ports need to generate adequate resources or the Government should provide budgetary support, said Mr Raghupathy.

The two-day seminar jointly organised by the Chennai and Tuticorin port trusts will deliberate the implications of the various taxes on port finances.

The Chennai Port Trust Chairman, Mr K. Suresh, said the Income-Tax Act has been amended with effect from 2003-04 whereby ports are not considered as local authorities for tax exemption. However, in States like Tamil Nadu, ports have been included as dealers and brought under the commercial taxes legislation. The service tax has also been made applicable for ports, and fringe benefit tax is also applicable. These issues are affecting port's revenues, said Mr Suresh.

In his inaugural speech, Mr D.T. Joseph, Union Shipping Secretary, said ports should address fundamental issues on taxes before taking them up with the Ministry of Finance or the Central Board of Direct Taxes. "Find out the root cause of the problem and find a solution before taking up an issue. We should be strong enough to indicate to the Centre how we are doing benefits to them, and how they are losing through various taxes. We need to convince the Centre that we have to make more profit," he said.

Service tax on dredging may affect Sethusamudram project

Levying service tax on dredging is likely to affect the capital cost of the Sethusamudram Ship Canal Project, according to Mr N.K. Raghupathy.

There is a 10.2-per cent service tax on dredging, which will cost Rs 1,680 crore out of the total project cost Rs 2,427 crore, he said.

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