Lok Sabha Question No. 2180 (UNSTARRED), answered on 2016-07-29
Subject: Tax Concession to Industries
Ministry: FINANCE
Asked by: LAXMAN GILUWA, MANSUKHBHAI DHANJIBHAI VASAVA

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA UNSTARRED QUESTIONS NO. 2180

TO BE ANSWERED ON FRIDAY, JULY 29, 2016 SRAVANA 7, 1938 (SAKA)

## TAX CONCESSION TO INDUSTRIES

## 2180: SHRI LAXMAN GILUWA: SHRI MANSUKHBHAI DHANJIBHAI VASAVA

Will the Minister of FINANCE be pleased to state:

- (a) whether  the  Government  is  providing  any  tax  concessions  to  various  industries  for establishing industries in extremely backward districts;
- (b) if so, the details thereof;
- (c) whether the Government has received any requests/demand from industries in this regard; and
- (d) if so, the details thereof along with the reaction of the Government thereon?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SANTOSH KUMAR GANGWAR)

- (a)  & (b):

## Direct Tax

The term 'extremely backward districts' does not appear as such in the provisions related to grant of tax concessions under the Income-tax Act, 1961. There are, however, tax exemptions available to the eligible business entities which are, interalia, based on their location also. Some of the important location-wise tax concession provisions under the Income-tax Act are as under:

| Section    | Nature of Tax concession                                                                                                                                            | Provision/eligibility                                                                                                                                                                                                                            |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 32AD       | An investment allowance at the rate of 15% of the cost of new asset acquired and installed is allowed as a deduction, subject to fulfilment of prescribed condition | Applicable to industrial undertakings in the notified backward areas in the state(s) of Andhra Pradesh, Telangana, Bihar & West Bengal                                                                                                           |
| 32(1)(iia) | Additional depreciation at the rate of 35% on the actual cost of plant & machinery subject to fulfilment of prescribed conditions                                   | Applicable to industrial undertakings in the notified backward areas in the state(s) of Andhra Pradesh, Telangana, Bihar & West Bengal. For industrial undertakings located in other areas, the rate of additional depreciation allowable is 20% |
| 80IC       | Deduction of profits and gains in respect of certain undertakings or enterprises in specified                                                                       | Subject to fulfilment of prescribed conditions (including he prescribed timeframe for beginning of manufacture or production), applicable to                                                                                                     |

| special category states   | certain category of undertakings located in Sikkim, Himachal Pradesh, Uttaranchal and North-Eastern States   |
|---------------------------|--------------------------------------------------------------------------------------------------------------|

## Indirect Tax

Fiscal  concessions  by  way  of  excise  duty  exemption  have  been  provided  to  new units  and  units  undertaking  substantial  expansion  in  the  North  Eastern  States  including Sikkim  (notification  Nos.  32/99  Central  Excise  and  33/99-  Central  Excise  both  dated 8.7.1999, notification No 56/2003- Central Excise dated 25.06.2003, notification No 71/2003Central Excise dated 09.09.2003 and notification No.20/2007-Central Excise, dated 25.04.2007), Jammu & Kashmir (notification No.56/2002- Central Excise & 57/2002- Central Excise, both dated 14.11.2002 and notification No. 1/2010Central Excise dated 06.02.2010), Uttarakhand and Himachal Pradesh (notification No.49 /2003- Central Excise and  50/2003-  Central  Excise, both dated 10.06.2003).  The  exemption  under  these notifications  is  available  for  a  period  of  ten  years  from  the  date  of  commencement  of commercial production. These exemptions are based on a package of incentives under the Industrial  policies  formulated  by  Department  of  Industrial  Policy  and  Promotion  for  these States and excise duty concessions constitute one of the elements of the package

(c) & (d):

## Direct Tax

The  demands for  tax  concession  from  various  stakeholders  including  the  industries  have been received from time to time. However, the stated policy of the Government is to phase out  profit  linked  and  area  based  deductions  from  the  Income  -tax  Act  along  with  gradual reduction in corporate tax rates to 25 %. The detailed phase out plan with respect to various exemption/deductions/concessions has been introduced by Finance Act, 2016.

## Indirect Tax

Representations from trade and industry associations and VIPs were received, inter alia, for extending similar exemptions to new areas.  The demands were not acceded to inter alia on the  ground  that  the  Empowered  Committee  of  State  Finance  Ministers  (EC),  has  already held that there is no room for such exemptions under GST.

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