Tax sops lure consumer firms to set up shop in Assam
ET Intelligence Group: Assam is big deal for wildlife lovers seeking their date with the one-horned rhinoceros. The world's biggest riverisland at Majuli is a global tourism drawcard. But hoteliers or travel firms aren't yet rushing to the sleepy northeastern state, which is fast emerging as India's latest factory hub -thanks to tax incentives.
In the past two months, at least nine consumer goods firms -Hindustan Unilever, Marico, Dabur, Emami, Eveready , Berger Paints, Bajaj Corp, Jyothy Labs and Huhtamaki PPL -have informed the bourses about the commencement of operations at their plants in Assam. Besides them, ITC, Patanjali, Ajanta Pharma, Britannia and Hetero Healthcare reportedly had plans of completing their facilities in Assam by March.
Firms faced the March 31 deadline to start commercial production to avail a 10-year excise-tax holiday.
According to the relevant Central Excise notification dated April 25, 2007, the unit in such areas should commence commercial production latest by March 31, 2017, to avail the tax holiday . “The exemption is applicable for a period of ten years from the date of commencement of commercial production,“ said Amit Bhagat, partner for indirect tax at PwC. Last week, Dabur announced the commissioning of its new facility at Tezpur in central Assam. The unit was constructed in a record eight months and involved a capex of `250 crore.
According to Ajanta Pharma's latest annual report, its new formulations facility at Guwahati would involve investments of over `300 crore, and would have had begun commercial production before March 2017. The tax holiday is also applicable to the other NE states -Tripura, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh and Sikkim. Assam, however, scores over others as it has broad-gauge railroad connectivity with the rest of India, and is also home to the region's biggest aviation hub. The region's only IIT is also based at Guwahati.
For many of these companies, it is not their first facility in the state.HUL and Marico have set up their second facility in Assam. ITC is reportedly setting up its biggest fullyowned plant in Northeast, involving an investment of `200 crore. With an investment of `300 crore, Emami commissioned its third unit in Assam. Jyothy Laboratories began commercial production at three new factories in Guwahati last month.
The tax holiday would cease to exist as general policy under the new GST regime. However, these benefits are grandfathered under the GST regime by the government. “The exemption will be converted into post -ax cash refund to the extent of 58% of the CGST paid," said Sachin Menon, head-indirect Tax, KPMG.
“The cap is set at 58% because 42% of the tax collected by the central government will anyway be transferred to the respective states under the devolution of revenue rules.Hence, the central government will only refund the share of revenue that is retained by them."
In the past two months, at least nine consumer goods firms -Hindustan Unilever, Marico, Dabur, Emami, Eveready , Berger Paints, Bajaj Corp, Jyothy Labs and Huhtamaki PPL -have informed the bourses about the commencement of operations at their plants in Assam. Besides them, ITC, Patanjali, Ajanta Pharma, Britannia and Hetero Healthcare reportedly had plans of completing their facilities in Assam by March.
Firms faced the March 31 deadline to start commercial production to avail a 10-year excise-tax holiday.
According to the relevant Central Excise notification dated April 25, 2007, the unit in such areas should commence commercial production latest by March 31, 2017, to avail the tax holiday . “The exemption is applicable for a period of ten years from the date of commencement of commercial production,“ said Amit Bhagat, partner for indirect tax at PwC. Last week, Dabur announced the commissioning of its new facility at Tezpur in central Assam. The unit was constructed in a record eight months and involved a capex of `250 crore.
According to Ajanta Pharma's latest annual report, its new formulations facility at Guwahati would involve investments of over `300 crore, and would have had begun commercial production before March 2017. The tax holiday is also applicable to the other NE states -Tripura, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh and Sikkim. Assam, however, scores over others as it has broad-gauge railroad connectivity with the rest of India, and is also home to the region's biggest aviation hub. The region's only IIT is also based at Guwahati.
For many of these companies, it is not their first facility in the state.HUL and Marico have set up their second facility in Assam. ITC is reportedly setting up its biggest fullyowned plant in Northeast, involving an investment of `200 crore. With an investment of `300 crore, Emami commissioned its third unit in Assam. Jyothy Laboratories began commercial production at three new factories in Guwahati last month.
The tax holiday would cease to exist as general policy under the new GST regime. However, these benefits are grandfathered under the GST regime by the government. “The exemption will be converted into post -ax cash refund to the extent of 58% of the CGST paid," said Sachin Menon, head-indirect Tax, KPMG.
“The cap is set at 58% because 42% of the tax collected by the central government will anyway be transferred to the respective states under the devolution of revenue rules.Hence, the central government will only refund the share of revenue that is retained by them."
