Mehbooba, Drabu hail extension; budgetary support of Rs 27, 413 cr for 4284 units in hilly, NE states

Centre extends tax exemptions for JK Industries till 2027

JAMMU: The long awaited tax exemptions under the newly implemented Goods and Service Tax regime have finally been announced for the industries in Jammu and Kashmir, albeit as refund, as announced by the Central government on Wednesday.

The centre has approved budgetary support amounting to Rs 27,413 crore for 4,284 industrial establishments in Jammu & Kashmir, besides Uttarakhand, Himachal Pradesh and north eastern states including Sikkim, under the GST regime as tax exemptions till March 2027.

“Within the framework of the GST Act, each such industrial units located in these states which availed the benefit of Central Excise exemption prior to coming into force of GST regime, will be entitled to its own refund mechanism during the period from July 01, 2017 to 31 March, 2027,” Finance Minister Arun Jaitley said after the decision of Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi.

Jaitley said that the support shall be available for the residual period, ten years from the date of the commercial production while adding that Department of Industrial Policy & Promotion will be notifying the scheme, including detailed operational guidelines for its implementation within 6 weeks.

It is pertinent to mention that under the new GST regime, there is no provision for tax exemption but there is one section under the Act which permits refunds.

"Therefore, refund would be permitted through DBT. The sunset clause of these exemptions has been extended to 2027. 4,284 industrial establishments will be entitled to this benefit," Jaitley said.

Ever since the implementation of GST in Jammu and Kashmir, the industrialists here have been demanding extension of special package from Central and State government, which they used to enjoy in pre-GST era in form of concessional electricity prices, VAT remissions, exemption Toll Tax, etc.

Meanwhile, Chief Minister Mehbooba Mufti has welcomed the extension in tax exemption announced on Wednesday by the Centre for the industries in Jammu and Kashmir, saying that the extension would go a long way in promoting industrial growth and economic development in the State.

Mehbooba specially thanked the Prime Minister Narendra Modi and the Union Finance Minister, Arun Jaitley for having taken personal and keen interest in ensuring continuation of tax exemption to the industries in Jammu and Kashmir for another 10 years.

Minister for Finance, Dr Haseeb Drabu has also welcomed the extension in tax exemption for the industries in Jammu and Kashmir, which he said would be paid as a refund under the present Goods and Services Tax (GST) regime.

Hailing the Centre's decision, Dr Drabu said the State Government would within the next fortnight work out the exact modalities and incentive structure that will benefit local industry, investors and consumers.

"The new incentive structure will protect the local industry and benefit local customers," he said, adding that the State Government is committed to incentivize the industries but the tax and fiscal incentives should be given in such a manner that it promotes greater employment and higher value addition.

Before the implementation of GST, the Centre was implementing a special package for Jammu & Kashmir, besides Uttarakhand and Himachal Pradesh to promote industrialization, which, among other benefits, included excise duty exemption for first 10 years after commencement of commercial production.

Upon repeal of the 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.

In pre-GST era, the industries in Jammu and Kashmir were getting tax exemption from Centre up to the tune of Rs 800 crore per year which used to come in form of various recessions, with different percentages of tax exemptions upon different classes of industries. The industries also used to enjoy the differential incentives for unsold inventory, the continuation of which is not clear at the moment. However, more clarity is expected once the DIPP notifies detailed operational guidelines for implementation of the said schemes in next six weeks.