Major tax cut for UP's 'mom and pop' stores

The purpose, behind slashing property tax on small commercial establishments by 70%, was to allow growth of small shops in residential areas, so that people do not have to travel long distances for their daily needs.

Uttar Pradesh has slashed property tax on small commercial establishments by 70 per cent.

The move will come as a relief for kirana or 'mom and pop' stores, which are facing increasing competition from modern retail and e-commerce.

So far, the property tax applicable on such properties was 5 times that of residential property tax.

It has now been pruned to 1.5 times.

The new rates will be applicable on shops and commercial establishments spread over an area of up to 120 sq ft and functioning under the jurisdiction of respective municipal corporations.

The state cabinet meeting chaired by chief minister Yogi Adityanath approved the proposal brought by the UP urban development ministry on Monday.

UP urban development principal secretary Manoj Kumar Singh said the purpose of the amendment was to allow growth of small shops in residential areas, so that people do not have to travel long distances for their daily needs.

“This would not only save their travel time and costs, but also curb traffic congestion,” he said, adding the government had already run the proposal as a pilot project in Lucknow and it was found that there was no significant dent in the tax kitty due to the relaxation.

“In our recent submission to the state government, we had recommended cutting property tax on small shops in city areas to help small traders and businessmen.

"Likewise, we have given other similar recommendations to support traders in the wake of fast growth in modern trade and e-commerce,” UP Traders Welfare Board vice chairman Manish Kumar Gupta told Business Standard on Tuesday.

The neighbourhood shops, which are also termed as ‘Kirana’, number almost 12 million in India and form the backbone of the country’s composite retail sector, churning out nearly 90 per cent of total retail turnover.

In fact, global retail giants, including Walmart, are now looking to partner these ‘mom and pop’ stores rather than treating them as competitors in India.

This also gels with the central government’s policy of protecting the interests of traditional retailers and small shopkeepers.

Last year, CM Adityanath had advised Walmart to create synergies with local traders and farmers for mutual benefits.

Walmart International president and CEO Judith McKenna and country president and CEO Krish Iyer had called upon the chief minister in September 2018 to brief him about the company’s activities in the state.

Photograph: Babu/Reuters