Centre approves budgetary support for industries in J&K, other hill states

Post GST shock, Rs 27413 Cr relief for 4284 units

JAMMU: Delivering on its promise of extending the long awaited tax exemptions under the newly implemented Goods and Service Tax regime, the central government on Saturday approved the scheme it had earlier announced to provide budgetary support to industrial units in Jammu and Kashmir and other hilly states including Himachal Pradesh, Uttarakhand, and North East states, in the form of refunds.
The approved scheme to be called as 'Scheme of Budgetary Support under GST regime to the units located in state of Jammu and Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim' will provide exemption to industrial units eligible for drawing benefits under earlier excise duty exemption and refund schemes.
Announcing the scheme, Union Commerce Minister Suresh Prabhu said, "The scheme is offered as a measure of goodwill to industrial units in these states."
In a series of tweets, the Minister added that while under the GST regime, there is no provision for exemption but there is one section under the Act which permits refunds.
"Recognising industry's concerns on withdrawal of exemptions, budgetary support for residual period as part reimbursement of GST was provided," he 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.
The scheme approved by government would provide budgetary support amounting to Rs 27,413 crore for 4,284 industrial establishments in these states 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 had announced on August 16.
The support shall be available for the residual period, ten years from the date of the commercial production.
Before the implementation of GST, the Centre was implementing a special package for Jammu & Kashmir announced vide Notification nos. 56/2002-CE dated 14. 11. 2002, 57 / 2002-CE dated 14. 11. 2002 and 01/2010-CE dated 06.02. 2010 as amended from time to time, 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.
As per the detailed notification put out by the Department of Industrial Policy and Promotion on Saturday, the scheme shall be limited to the tax which accrues to the central government under Central Goods and Service Act, 2017 and Integrated Goods and Services Act, 2017.
As per the notification, the amount of budgetary support under the scheme for specified goods manufactured by the eligible unit shall be sum total of 58% of the Central tax paid through debit in the cash ledger account maintained by the unit in terms of section 49(1) and 29% of the integrated tax paid through debit in the cash ledger account maintained by the unit in terms of section 20 of the Integrated Goods and Services Act, 2017 after utilization of the Input tax credit Tax of the Central Tax and Integrated Tax.
For availing the benefit, the manufacturer shall file an application for payment of budgetary support for the Tax paid in cash, other than the amount of Tax paid by utilization of Input Tax credit under the Input Tax Credit Rules, 2017, to the Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be, by the 15th day of the succeeding month after end of quarter after payment of tax relating to the quarter to which the claim relates.
The government stated that where inputs are procured from a registered person operating under the Composition Scheme under Section 10 of the CGST, the sum total of both these parts shall be reduced by the same percentage as is the percentage value of inputs procured under Composition scheme out of total value of inputs procured.
Budgetary support under this scheme shall be worked out on quarterly basis for which claims shall be filed on a quarterly basis namely for January to March, April to June, July to September & October to December.
Pertinently, 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.