Mehbooba, Drabu hail decision
New Delhi/Srinagar: Industries in the north-eastern and Himalayan states of India will continue to get tax exemption till March 2027, albeit as a refund, under the current Goods and Services Tax (GST) regime rolled out on July 1, Union Finance Minister Arun Jaitley said on Wednesday.
“Within the framework of the GST Act, each industry will be entitled to its own refund mechanism during this particular period (till March 31, 2027),” Jaitley said after a meeting of the Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi.
The Committee has given approval to the scheme of providing budgetary support under the GST regime the eligible industrial units in Jammu & Kashmir, Uttarakhand, Himachal Pradesh and the north-eastern states including Sikkim, he said.
Industries in these states used to get a 10-year exemption under the previous excise regime. As per the scheme, industries which had commenced operations during the period got an excise tax holiday for 10 years, Jaitley said, adding that there is a separate residuary period for every industry because of commencement of production and their consequent entitlement of a 10-year exemption.
Under the new GST regime, there is no provision for exemption, but there is a section under the Act which permits refunds.
“Therefore, refund would be permitted through DBT (Direct Benefit Transfer). The sunset clause of this exemption has been extended to 2027.”
There are 4,284 industrial establishments that will be entitled to this benefit, Jaitley said. Budgetary support of Rs 27,413 crore for the scheme has been approved from July 1, 2017 till March 31, 2027 for such industrial units located in these states as had availed of the benefit of Central Excise exemption prior to the coming into force of the GST regime.
Upon the repeal of Central Excise duty laws, the government has decided to pay a budgetary support equal to the Central share of the cash component of Central GST and Integrated GST paid by the affected eligible industrial units.
Chief Minister Mehbooba Mufti welcomed the extension in tax exemption, saying it would go a long way in promoting industrial growth and economic development in the state.
Mehbooba specially thanked the prime minister and the finance minister for having taken a personal and keen interest in ensuring the continuation of tax exemption to industries in Jammu and Kashmir for another decade.
State Minister for Finance Haseeb Drabu has also welcomed the extension.
Hailing the decision, Drabu said the state government would within the next fortnight work out the exact modalities and incentive structure that would most benefit local industry, investors and consumers. “The new incentive structure will protect local industry and benefit local customers,” he said.
He said under the CM the state government is committed to incentivise industries, but tax and fiscal incentives should be given in such a manner that it promotes greater employment and higher value-addition.
With PTI inputs