Lok Sabha Question No. 3216 (UNSTARRED), answered on 2021-03-15
Subject: Tax Exemptions for Setting up of Industries
Ministry: FINANCE
Asked by: Ashok Mahadeorao Nete

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA UN-STARRED QUESTION NO. 3216

TO BE ANSWERED ON MONDAY, MARCH 15, 2021 PHALGUNA 24, 1942 (SAKA)

## TAX EXEMPTIONS FOR SETTING UP OF INDUSTRIES

3216. SHRI ASHOK MAHADEORAO NETE:

Will the Minister of FINANCE be pleased to state:

- (a) the details of industries in the country which have been exempted from central taxes at present, State and sector-wise;
- (b) whether the Government has taken or proposes to take steps to provide exemption in central taxes including central excise for setting up of industries in the tribal, backward, extremely inaccessible and naxal-affected areas of Gadchiroli-Chimur in Maharashtra for their development;
- (c) if so, the details thereof; and
- (d) if not, the reasons therefor?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

- (a) to (d):
- (i)  It  is  the  stated  policy  of  the  Government  to  phase  out  exemptions  and  deductions provided under the Income-tax Act, 1961 ('the Act') while simultaneously reducing the tax  rates.  Accordingly,  the  Finance  Act,  2016  inter-alia  provided  a  sunset  date  for  the existing  profit  linked  deductions  under  the  various  provisions  of  the  Act  including  the
- profit linked deductions set up in specific areas or sectors.

In continuation with the stated policy, the Taxation Laws (Amendment) Act, 2019 inserted section 115BAA to provide for concessional tax rates of 22% (plus surcharge and cess at the applicable rates) for existing domestic companies.

- (ii)  It  also  inserted  section  115BAB  to  the  Act  to  provide  for  a  concessional  taxation regime, wherein new manufacturing companies, incorporated on or after 01.10.2019 and which commence manufacturing or production by 31.03.2023 would be required to pay tax  @15%(  plus  surcharge  and  cess  at  the  application  rates),  provided  that  such companies do not avail of any specified exemptions or deductions and other conditions mentioned  in  115BAB  are  satisfied.  Further,  it  is  also  been  provided  that  domestic companies  opting  for  concessional  taxation  regime  shall  not  be  required  to  pay  any minimum alternate tax.

(iii)  The GST Council in its meeting held on 30.09.2016 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 and the concerned units shall be required to pay tax in the GST regime. Accordingly, the erstwhile schemes for exemption of excise duty for Jammu & Kashmir, Himachal Pradesh & Uttarakhand and North East States  including  Sikkim  which  were  in  operation  till  18.07.2017  through  exemption notifications issued by the Department of Revenue, were withdrawn. Subsequently, the Central Government has initiated a new scheme to provide budgetary support to units covered under the erstwhile schemes vide notification issued by Department of Industrial Policy and Promotion under Ministry of Commerce vide F. No. 10(1)/2017-DBA-II/NER dated 5th October, 2017.

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