Putting at rest all the speculations and demands about the revival of the tax holiday scheme in hill states like Himachal Pradesh and Uttarakhand, the Prime Minister's Office (PMO) has said that the scheme that came to an end on March 31, 2010 will not be revived, it is learnt.

According to sources, the PMO has given an assurance in this regard to the Punjab government in a letter written to the Punjab government recently. The PMO clarification comes as a reply to the Punjab government's earlier letters on the issue as speculation was rife that the central government may revive the scheme due to the pressure being exerted by the hilly states to revive the scheme.

Ever since the tax holiday scheme expired on March 31, 2010, chief ministers of Himachal Pradesh and Uttarakhand, central ministers from the hilly states including union commerce & industry minister Anand Sharma and senior political leaders like LK Advani and others have been putting pressure on the central government to revive the scheme which was announced by the Vajpayee-led BJP government at the Centre way back in 2002 to boost the sagging industrial activities in these hilly states.

Only a week ago, Himachal Pradesh chief minister Prem Kumar Dhumal had raised the demand for extension of excise duty exemption on a public platform before UPA chairperson Sonia Gandhi during the stone laying ceremony for Rohtang Tunnel at Manali in Himchal Pradesh. He argued for the extension of the scheme at least till March 31, 2011, in order to encourage more investment and employment in the state. "The benefits could also be extended to Morni Hills in Haryana and Pathankot hills in Punjab if these states have any objection to Himachal getting the package," Dhumal had said.

Earlier, senior BJP leader LK Advani had met prime minister Dr Manmohan Singh along with a party delegation that included leaders of Opposition in both Houses of Parliament and the chief ministers of the two hilly states and argued that the two states are industrially backward states and needed financial support.

The two hilly states, since the inception of the tax holiday scheme, had drawn millions in investments from a range of industries including pharmaceuticals. In fact, these states have over the years become the hub of pharmaceutical activity in the country.

Meanwhile, experts said that in spite of the intense political pressures being exerted from different quarters, Union finance minister Pranab Mukherjee decided to do away with the tax holiday as he looked to clean up the exemption-ridden tax regime in the run-up to the launch of a comprehensive goods and service tax (GST) regime which is proposed to come into effect from April 1, 2011.