• Dec
  • 11
  • 2009

Excise exemption to Himachal Pradesh and Uttarakhand under review

Himachal Pradesh and Uttarakhand, the two Himalayan states which have drawn thousands of crores of investments due to the tax benefits they offer, stare at the possibility of losing the status as Finance Minister Pranab Mukherjee looks to plug loopholes and boost revenues for a government that’s on a spending spree. “Excise exemption to these two hilly states is under review,” said a government official who did not want to be identified. “A final decision would be taken by Prime Minister on the issue.”

Mr Mukherjee who has spent record funds this year to revive economic growth may rollback at some fiscal stimulus measures in the coming budget and also withdraws some special tax exemptions as he pushes for a friendly goods and services tax.

Investments in these two states were exempted from excise duty as a special case to push growth in the economically backward regions which some say were misused. These exemptions lapse in March 2010, unless extended.

Hindustan Unilever, makers of Dove and Lifebuoy soaps and motorcycle maker Hero Honda are among scores of enterprises that have invested in the two states and shown high profitability that boosted their share prices.

If the exemption is not extended, many companies which planned to invest in those states may not do so. The governments of these states have already written to the Prime Minister lobbying for an extension. These exemptions were criticised for many reasons — misuse, flight of capital from neighbouring states and skewed development in states.

So, to minimise the damage, the government tinkered with rules last year as it tightened the eligibility norms for availing excise exemption in these states. Companies that carried out labelling, packaging or sorting instead of manufacturing were no longer eligible for the tax holiday.

The various area-based tax exemptions are estimated to have led to revenue loss of over Rs 10,000 crores this fiscal year to the government, hence there is a move to reverse some of them.

Units in Himachal and Uttarakhand that start their commercial production before March 31, 2010, enjoy 100 per cent excise exemption. The period of exemption from the start of the date of commercial production and is available for 10 years.

However, all investments made up to March 31, 2010, will continue to enjoy the benefits for 10 years even if the 100 per cent excise holiday is allowed to lapse.

Sandeep Kanoi

11 Responses to “Excise exemption to Himachal Pradesh and Uttarakhand under review”

  1. raj pal sharma says:

    raj pal sharma
    Dear Sir,

    What the following information:-
    1) Exemption policies for company at himachal Pradesh tax free zone: VAT , Central Excise, CST, GST , Freight and Transport, Raw-material Purchase, Income Tax.

    2) Tabulated Benefits given to company in himachal pradesh with installed capacity. What formalities has to be completed, if company increases the capacity. What are the benefits given to company till date and what are their expiry dates. What benefits company still need to apply for.

    3) What are conditions and constraints if the industry expands their capacity or increase their production capacity in himachal pradesh.

    4) What is the Effect of expansion of company with regard to Exemption policies and benefits and documentation.

    5) Is Freight subsidy available. If available how much % and what are the conditions applicable.

    6) What are the Excise Exemptions Constraints for company in himachal pradesh.

    7) Grid to be prepared department wise with regard to Exemptions for company. (DIC, VAT, Central Excise, CST, GST, Labour department,

    Regards
    Altaf Ahamed

    Amit barnwal says:
    February 11, 2010 at 10:43 AM
    yes our primeminister must extend this excise benifit for this two states.they need this benifit to devlop their state very well.if they received 3years more time,they will be abel to change their state and they will not look for central to more help time to time.
    That’s all.

  2. Chandrakant Mehta says:

    Sir
    IF we take over a manufacturing unit in BAADI , established before 31st march 2010.& availing central excise exemption benefit for 10 year period,Unit name & product will be changed by us( Buyer ), Please guide, whether new unit will be eligible for excise exemption?
    Please also inform me about the other benefits in BADDI (Himachal Pradesh) such as VAT,Income Tax,Subsidy, Octroi etc.
    For your information we are proposing to manufacture Plastic Household & Thermoware products so kindly give your suggestion at the earliest

  3. Dipak Shah says:

    Sir
    IF We take over manufacturing unit , established before 31st march 2010.& availing central excise exemption  benefit for 10 year period,Unit name & product will be changed by us( Buyer ), Please guide, whether new unit will be eligible for excise exemption?

  4. Manoj sharma says:

    Sir, I want to know What is processor of jow work from uttrakhan to noida with exiseable goods

  5. parag says:

    in UTTARAKHAND
    what is the process for taking input Cr. of excise duty & service tax Cr. which is take on excise in other state

    Please tell me

  6. friends glass & glazing pvt. ltd. says:

    sir,
    we have a unit at kashipur runninh under excise exemption.
    now we wants to expand the business & wants to purchase new land in the same area.
    kindly confirm me that weather i will get excise exemptiom or not

    thanks & regard
    vijay singh raghav

    new year wallpaper, utorrent

  7. Anshuma says:

    We have a manufacturing unit in Uttarakhand, have come into commercial production before 31/3/10 and have availed 100% excise exemption. We are a proprietorship concern. I wish to know how can I convert my organisation to a corporate entity without loosing my exemption facility. Please give your expert opinion.

  8. R.RAJKUMAR says:

    I DID NOT FIND ANY EXCISE BENIFT AT UTRANCHAL. SINCE THE MANUFACTURES ARE NOT ALLOWED TO TAKE INPUT CREDIT IF THEY PURCHASE RAW METERIALS FROM OTHER SATE OTHER THAN UTK.EVEN IF THEY IMPUT THEY PAYS CVD WITH OUT AVAILING INPUT CREDIT.
    ONELY ON VALUE ADDITION THEY GAINS EXCISE BENIFIT .SURE THIS NOT THAT MUCH TO INCRESE THEIR PROFIT VERY HIGH. EVEN THEY COMPANIES ARE ELIGIBLE FOR NCOME TAX
    BENIFIT BUT THEY HAVE TO PAY MAT. MAT IS EVEN EFFECTED FOR THE LLP COMPANIES FROM THE F.N.2011-12. FOR THE PRODUCTION THE COMPANY CANNOT BUY RAW METERIALS WITHIN
    UTK TO AVAIL INPUT CREDIT. SMALL STATE AVAILABLITY PROBLEM. TO MY KNOWLEDGE THE COMPANIES SET UP THERE MAY NOT GET THAT MUCH OF BEFIFIT AS PEOPLE THINKS. TKS

  9. Altaf Ahamed says:

    Dear Sir,

    What the following information:-
    1) Exemption policies for company at himachal Pradesh : VAT , Central Excise, CST, GST , Freight and Transport, Raw-material Purchase, Income Tax.
     
    2) Tabulated Benefits given to company in himachal pradesh with installed capacity. What formalities has to be completed, if company increases the capacity. What are the benefits given to company till date and what are their expiry dates. What benefits company still need to apply for.
     
    3) What are conditions and constraints if the industry expands their capacity or increase their production capacity in himachal pradesh.
     
    4) What is the Effect of expansion of company with regard to Exemption policies and benefits and documentation.
     
    5) Is Freight subsidy available. If available how much % and what are the conditions applicable.
     
    6) What are the Excise Exemptions Constraints for company in himachal pradesh.
     
    7) Grid to be prepared department wise with regard to Exemptions for company. (DIC, VAT, Central Excise, CST, GST, Labour department,

    Regards
    Altaf Ahamed

  10. Amit barnwal says:

    yes our primeminister must extend this excise benifit for this two states.they need this benifit to devlop their state very well.if they received 3years more time,they will be abel to change their state and they will not look for central to more help time to time.
    That’s all.

  11. parmarnk says:

    Dear sir,
    I want to know the treatment for assessment where the manufactured material transferred by the manufacture from duty free zone –uttarakhand to normal zone and then billed to the party.

    In fact the manufacturer was not having enough orders this new duty free unit and just to regard invitation from govt to do the manufacturing in uttarakhand, he shared orders fullu or partly, belong to his main unit, to run the unit. The uttarakhand unit pmanufactured these partial or fully orders and done the stock transfer to main unit . the main unit received these partial or fully orders at his stock point and billed to the party as per the said technical name given in the order. In this duration, the material received was finished goods and not required any further manufacturing. My request is to find out that if—

    1) The main unit billed these items to the party as per given specific technical name in the order, is he liable to pay the duty again to the duty free zone means uttarakhand by workout as CAS-4.

    2) If the main unit collect duty as per order term and as per local duty terrif, can the main unit eligible to take set off in his state .

    3) Can the authority of duty free zone ( uttarakhand ) give a summon and pressurized on that ground that the stock transfer made from uttarakhand should not be billed in the same description and same weight ,hence not assessable as duty free or exempted and assessable only as per provisions of normal terrif and liable again to pay duty to the uttarakhand which is duty free zone .

    4) There was no such procedure defined that to start the business in uttarakhand, manufacturer has to apply and take exemption under such and such procedure. The manufacturer taken permission/ sanctions from all other relevant govt authorities like industry deppt etc and started business. It was matter of 2005-6 and now the excise deptt say in 2008, advised the procedure in which may be applied for exemption. The manufacture applied in that procedure to the deptt in same time. Can the excise deptt impose duty on the total manufactured good from the day one just on that ground that you have taken exemption. while publically is it already a duty free zone.

    5) Just because of these harassments, if the manufacturer close unit , is it fare enough by the excise deptt., because it is again contrary to the govt policy. The uttarakhand govt inviting entrepreneurs for the development of economy and industry as well as employment , but these actions definitely gives reverse impact. The entrepreneurs came here on invitation and are as guest and are suffered due the department behavior.

    Kindly advise on these . your honourable advise on this will support me and the excise department also to move in the right direction and helpful for manufacturer to restart the unit in uttarakhand.

    Kindly reply on my email ID parmar791818@gmail.com

    Regards

    N.K. PARMAR
    THE FINANCIAL CONSULTANT

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