The Wipro building at the electronic complex in Salt Lake

Calcutta, July 21: To make Bengal a more attractive destination for IT and IT-enabled service companies, the government has decided to slash their property tax by 50 per cent.

The Assembly today passed the West Bengal Municipal (Amendment) Bill, 2006, which will ensure the cut.

?It has been a long-standing demand from the industry. We considered it legitimate,? IT minister Debesh Das said, admitting that property tax had been a matter of contention between the government and industry for a while.

?I took up the issue following representations from companies like HSBC and IBM. These companies have plans to book space at Sunrise City in Nonadanga, but the high property tax rate is their major concern,? explained Das.

In 2003, Buddhadeb Bhattacharjee had announced that Calcutta Metropolitan Development Authority would develop Sunrise City, off Rajarhat, for IT and ITES companies.

The decision to lower the tax is being seen as a move to encourage companies to consider Sunrise City, where the tax would come down from 60 per cent to 30 per cent, as their possible destination.

Das said if a company has to pay Rs 30 a square foot as rent now, its expenditure along with the 60 per cent tax is Rs 48 a sq ft. The slash would bring the figure down to Rs 39 a sq ft.

Salt Lake Electronics Complex, the state?s IT hub, would also benefit as the bill would bring down tax rates from 10.5 per cent to 5.25 per cent.

?IT companies have always preferred Salt Lake because

of its low tax rate. But now the fringe areas of Calcutta can also be developed as IT zones,? said Rahul Saraf, who is building Technopolis in Salt Lake.

Bikram Dasgupta, the CEO of Globsyn Technologies, too, said the move would make operations cheaper and have a positive impact on balance sheets. ?The government has finally realised that cost of space has gone up, and this is a counter balancing measure.?

According to the bill, the exemption will be given for the first six years from the quarter of the assessment year following the date of approval.

A whole range of IT-related operations is eligible for the exemption (see box). But individual units will have to seek a certificate from the IT department to avail the benefit.

To ensue that the benefit reaches the target segment, the bill says ?at least half of the land and building? concerned will have to be exclusively used for IT and ITES. Similar exemptions would also be offered to the closed and sick units certified so by the industrial reconstruction department.

The urban development minister said the government is also planning to rationalise the property tax structure by including locational considerations during fixing of rates.