Govt goes all out to woo future industry with ‘historic’ freebies
New policy: VAT,CST waived of up to 80 pc; higher tax sops for industrially-backward districts,big-ticket investments.
With investing as little as Rs 1 crore in Punjab,you can avail benefits up to half your fixed cost of investment. For big-ticket projects — Rs 500 crore or above — it can go up to 80 per cent of fixed cost investment in terms of value added tax (VAT) and central sales tax (CST) exemptions.
After free power bills for farmers,Punjab took the freebie route in its new industrial policy that was approved by the cabinet on Monday.
Deputy Chief Minister Sukhbir Singh Badal,who unveiled the policy,promised “never before” sops in terms of VAT and CST waivers,besides extending exemptions hitherto allowed only to mega projects — Rs 100 crore and above. For small and medium scale industry,he announced waiver of electricity duty,stamp duty,property tax (urban areas),purchase tax,mandi fee,rural development and infrastructure cess (agro processing industry).
The sops,in Sukhbir’s words,will attract investment of Rs 2 lakh crore in three years. “These incentives are historic and will result in flight of industry from industrial states such as Gujarat and Madhya Pradesh to Punjab,” he said.
Incentives for manufacturing industry will grow with scale of investment and are higher for 13 industrially-backward districts classified as Zone I — Fazilka,Ferozepur,Tarn Taran,Amritsar,Gurdaspur,Pathankot,Hoshiarpur,Sangrur,Barnala,Mansa,Bathinda,Muktsar and Faridkot.
Zone I also includes all industrial parks,focal points and industrial estates. The VAT waiver in these districts is between 50 to 80 per cent with 75 per cent CST exemption for all categories of investments. The maximum quantum of incentives is capped at 80 per cent of fixed cost of investment (FCI).
In Zone II — Patiala,Fatehgarh Sahib,Ludhiana,Moga,Jalandhar,Kapurthala,Shaheed Bhagat Singh Nagar and Mohali districts — there will be no VAT or CST waivers up to an investment of Rs 10 crore. VAT retention will range between 25 to 40 per cent depending on the FCI,in addition to 50 per cent concession on CST. The maximum incentive in Zone II has been capped at 40 per cent of FCI.
Tax incentives are the highest for agro-processing industry,keeping in line with state’s crop diversification policy. These projects will also be exempt from paying mandi fee,rural development fee,infrastructure development cess and purchase tax on wheat and milk.
The IT and knowledge industry will enjoy 100 per cent exemptions in terms of VAT and CST but it will be limited to the only two districts of Mohali and Amritsar being developed as the IT hubs,Principal Secretary (Industries) Karan Avtar Singh said during his presentation of the new policy.
A new category of projects — fixed investment above Rs 500 crore — will enjoy the highest 80 per cent VAT incentive and 75 per cent CST retention with maximum limit of 80 per cent of the fixed investment for 13 years.
That it can result in the existing industries disbanding old units to set up new ones to avail the benefits is something Sukhbir is not worried about. “These incentives will be allowed only to new and expansion units,which show investment in new or imported equipment,” he said.
On the tax sops rendering existing units non-competitive,Sukhbir said the existing units enjoy past benefits in terms of low cost of land and other fixed cost of investment.
Other than new tax concessions,the policy renews some old promises — single window for speedy approvals and self-attestation of documents. “The policy will have online applications and approvals,self-attestation of documents,third party certification of building plans and payment gateway for online payments. Punjab Pollution Control Board has already made the procedure online. All these processes will be streamlined in the coming few weeks and the policy will come into effect from the date of its notification,” said Sukhbir,adding that Punjab will soon hold a “investment summit” and road shows in different parts of the country to give wide publicity to the policy.
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