DIPP notifies rules for excise-free zone scheme

NEW DELHI: The Department of Industrial Policy and Promotion ( DIPP) has notified guidelines for the excise free zone scheme for eligible manufacturing units in Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim. Companies who have units operating in these states will get reimbursement of 58% on the Central Goods and Service Tax.

“The new scheme is offered, as a measure of goodwill, only to the units which were eligible for drawing benefits under the earlier excise duty exemption/refund schemes but has otherwise no relation to the erstwhile schemes,” the DIPP notification said.

Budgetary support of Rs. 27,413 crore for the scheme has been approved for a ten year period starting from the date of GST implementation July 1, 2017 to March 31, 2027. Cabinet had approved the scheme in August this year.

The GST Council in its meeting held on September 30, 2016 had noted that exemption from payment of indirect tax under any existing tax incentive scheme of Central or State Governments shall not continue under the GST regime. The Council left it to the discretion of government to notify schemes of budgetary support to such units.

“Any unit which is found on investigation to over-state its production or make any misdeclaration to claim budgetary support would be made in-eligible for the residual period and be liable to recovery of excess budgetary support paid,” the notification further added.

Area-based programmes allow businesses in special-category states with a low industrial base, such as Himachal Pradesh, Uttarakhand, and the seven states of the Northeast, exemptions from the payment of central taxes such as excise duty and some other state levies.

Sectors such as automobile, pharma and consumer goods which have units in these states will benefit of the area based exemption.