The correct answer is: d) Promote specific industries.
Tax holidays and subsidies are financial incentives offered by governments to businesses to encourage them to invest in certain industries or regions. In the case of Sikkim, the government offers these incentives to promote the development of certain industries, such as tourism, agriculture, and manufacturing.
Tax holidays are a type of tax incentive that allows businesses to defer or reduce their tax liability for a certain period of time. This can be a significant financial benefit for businesses, as it can free up cash flow and allow them to reinvest in their operations. Subsidies are another type of financial incentive that can be offered to businesses. Subsidies can take a variety of forms, such as direct payments, tax credits, or grants. They are typically used to offset the costs of doing business in a particular industry or region.
The government of Sikkim offers a number of tax holidays and subsidies to businesses. These incentives are designed to attract investment and promote the development of certain industries. The government hopes that these incentives will create jobs, boost the economy, and improve the standard of living in Sikkim.
Here is a brief explanation of each option:
- a) Make Sikkim a business-friendly destination. This is not the main purpose of tax holidays and subsidies. While these incentives can make a destination more attractive to businesses, they are not the only factor that businesses consider when making investment decisions.
- b) Increase government revenue. Tax holidays and subsidies can reduce government revenue in the short term. However, the government hopes that these incentives will lead to increased economic activity and tax revenue in the long term.
- c) Discourage new businesses from opening. This is not the purpose of tax holidays and subsidies. In fact, these incentives are designed to encourage new businesses to open.
- d) Promote specific industries. This is the main purpose of tax holidays and subsidies. The government of Sikkim offers these incentives to promote the development of certain industries, such as tourism, agriculture, and manufacturing.