DIPP amends ‘Industrial Development Scheme for the State of Jammu & Kashmir, 2017’; extends GST / Income Tax Reimbursements and Transport / Employment Incentives to registered units
The Department of Industrial Policy & Promotion (“Department”) under the Ministry of Commerce and Industry (“Ministry”), Government of India has, in a Notification dated 1stJanuary, 2019, amended the ‘Industrial Development Scheme for the State of Jammu & Kashmir, 2017’ (“Scheme”).
On 23rd April, 2018, the Department introduced the Scheme in order to boost industrialization in the state of Jammu and Kashmir. The Scheme is applicable to all new industrial units and existing industrial units undertaking substantial expansion in manufacturing sector and services sector including Bio-technology and Hydel Power Generation Units up to 10 MW located in the State of Jammu & Kashmir. Under this Scheme, all eligible industrial units will be entitled to benefits under one or more components of this scheme, even if such units are getting benefits under other schemes of the Government of India.
New industrial units and existing industrial units undertaking substantial expansion are also eligible under the scheme. A new unit will be required to fulfil the following conditions:-
a. it is not formed by splitting up, or reconstruction of a business already in existence.
(b) it is not formed by transfer to the new unit of plant or machinery previously used for any other purpose.
(c) it has not relocated from elsewhere and/or is not an existing unit reopened under a new name and style.
Initially, the Scheme was effective from 15th June, 2017 and was supposed to remain in force up to 31st March, 2022.
Thereafter, on 1st January, 2019, the Department introduced amendments to the Scheme.
Key highlights of the amendment
a. Para 3 of the Industrial Development Scheme for the State of Jammu & Kashmir, 2017 which talks about the ‘Commencement and Duration’ of the has been replaced with a new Para 3 which states that the Scheme will be held as effective since 15th June, 2017 and will remain in force up to 31st March, 2020. It further states that –
(i) Goods and Services Tax (GST) Reimbursement,
(ii) Income Tax (IT) Reimbursement,
(iii) Transport Incentive (TI) and
(iv) Employment Incentive (EI) will be extended to the units which register under the scheme.
The aforementioned benefits of the Scheme will be available up to 31st March, 2020.
b. The existing Para 4.4 has been replaced by a new Para 4.4 which states that the total benefits from all components of the scheme put together must be limited to the total investment in plant and machinery subject to a maximum limit of Rs. 200.00 crore per unit. Plant and Machinery for the service sector industrial units must include cost of construction of building and all other durable physical assets basic to the running of that industry but exclude cost of land and consumables, disposables or any other item charged to revenue.
c. Under para 6, which mentions the different incentives which will be provided to eligible industrial units on reimbursement basis the Central Capital Investment Incentive for access to credit (CCIIAC), Central Interest Incentive (CII) and the Central Comprehensive Insurance Incentive (CCII), new sub paras have been added, namely:
Goods and Services Tax (GST) Reimbursement – All New industrial units and existing industrial units undertaking substantial expansion will be eligible for reimbursement of Goods and Services Tax (GST) paid on finished products manufactured in Jammu & Kashmir up to the extent of Central share of the CGST and IGST for period of 5 years from the date of commencement of commercial production subject to the condition:
GST reimbursement on finished goods is applicable only on the net GST paid, other than the amount of Tax paid by utilization of Input Tax credit under the Input Tax Credit Rules, 2017.
Income Tax (IT) Reimbursement – The industrial unit set up under this scheme can claim reimbursement of Central share of income tax for first 5 years, including the year of commencement of commercial production by the unit.
Transport Incentive (TI) – All eligible new industrial units and existing industrial units undertaking substantial expansion can avail incentive on Transportation of finished goods through railways or the railway public sector undertaking, inland waterways or scheduled airlines for a period of 5 years from the date of commencement of commercial production / operation, subject to production of actual receipt. The terms and conditions of transport incentive through different modes are as follows:
(a) Upto 20% of the cost of transportation including the incentive currently provided by railways or the railway PSUs for movement of finished goods by rail from the railway station nearest to the location of industrial unit to the railway station nearest to the location of the buyer.
(b) 20% of the cost of transportation for finished goods for movement through Inland Waterways Authority of India from the port nearest to the location of industrial unit to the port nearest to the location of the buyer.
(c) 33% of the cost of transportation of Air Freight by scheduled airlines and non-scheduled operator permit (NSOP) holders approved by DGCA for perishable items / goods (IATA) from the airport nearest to the place of production to any airport within the country, nearest to the location of the buyer.
Employment Incentive (EI) – The Department will be paying additional 3.67% of the employer’s contribution to Employees’ Provident Fund (EPF) in addition to Government bearing 8.33% Employee Pension Scheme (EPS) contribution of the employer in the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), to the extent the claim is not already covered under PMRPY.