The country's first large taxpayer unit is expected to become operational from October 1 this year at Bangalore, with over 40 companies having expressed their interest in joining the facility.

Finance ministry officials said Chennai was likely to be the second location for such a unit as around 30 companies there had evinced interest in joining this setup.

Finance Minister P Chidambaram had, in his Budget speech of 2005-06, announced the proposal to set up such units, which were expected to become operational from July 1.

Delays occurred following a poor response from companies in major cities like Mumbai and Delhi. In both these cities only around 10 companies each have expressed interest.

To encourage more companies to join the LTU, the finance ministry had decided to make it optional for companies to join the scheme.

Officials said the meeting of the chief financial officers of major companies located in Delhi was likely to be organised later this week to build interest in more companies to join the LTU.

The LTU is intended to be a self-contained tax administration office which will provide a single window clearance for all matters relating to income, corporate, excise and service taxes.

Companies will be able to file their direct and indirect tax returns at these centres and will be assessed for all these taxes at the LTUs.

The eligibility of companies to join an LTU is restricted to those units which are at present assessed for income and corporate tax in any of the five cities -- Delhi, Bangalore, Chennai, Mumbai and Kolkata.

Eligibility is also restricted to those who have paid either an excise duty in cash of Rs 5 crore (Rs 50 million) or more, service tax of Rs 5 crore or more, or advance tax of Rs 10 crore (Rs 100 million) or more FY05.

Officials of the Central Board of Excise and Customs said amendments in excise rules would have to be made to operationalise some of the benefits such as transfer of excess excise or service tax credit of a taxpayer from one of his manufacturing or service providing unit to another.

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