Odisha seeks IT exemption on trust funds

The Odisha government has asked for income tax exemption on interest accrued on bank deposits for contributions made to the District Mineral Foundation (DMF).

In one of the pre-Budget demands, the state's finance minister Shashi Bhushan Behera has sought exemption of DMF funds from income tax as such funds are used for direct benefit and development of the people living in areas affected by mining operations.

"In Odisha, DMF Trust Boards have been constituted in all the 30 districts. The income tax authorities have deducted tax from one of the DMF Trust accounts and also issued notices to others on the interest income of the Trusts. The state government has requested the Government of India on several occasions to exempt interest earnings of DMF Trust Board from Income Tax (IT), Behera said.

Flagging the issue of farm loans, the minister said availability of bank credit without collateral and third party guarantees would go a long way in providing access to long-term credit to farmers.

"Government of India should set up a separate credit guarantee trust fund preferably under Nabard (National Bank for Agriculture & Rural Development)," Behera said.

Opposing the central government's move to change dates for monthly release of tax devolution, Behera said the decision will adversely affect the finances of the states as a major proportion of expenditure on account of salary and pension is incurred in the first week of the month. The Union government has recently changed the release date of tax devolution to states from the first working day of the month to 15th of every month.