3-tier mechanism to ensure smooth implementation
10 services eligible; existing, new units to get benefits
Mohinder Verma
JAMMU, Feb 20: Union Government has announced new Central Sector Scheme for Industrial Development of Union Territory of Jammu and Kashmir for a period of 16 years applicable with effect from April 1, 2021. The scheme has been tailored in such a way that the existing as well as new units will get immense benefits under different components.
The scheme has been announced by the Ministry of Commerce and Industry and it will remain applicable with effect from April 1, 2021 till March 31, 2037. However, registration will continue till September 30, 2024 and all applications for registration will be disposed of by March 31, 2025 unless otherwise extended.
Capital Investment Incentive, Capital Interest Subvention, Goods and Service Tax Linked Incentive and Working Capital Interest Subvention are the major components of the scheme.
A total of 10 services will be eligible for benefits under the New Central Sector Scheme for Industrial Development of Jammu and Kashmir and these are tourism and hospitality services (including health and wellness tourism); services promoting film tourism (including film cities and studios); ropeways, entertainment parks and rides; heritage property restoration services; healthcare services; IT and ITeS services; maintenance and repair services; freight terminals, logistics parks and warehousing (including cold store services); testing, R&D, analysis and certification services and educational and skill development services.
A three-tier mechanism vis-a-vis governance and implementation has also been put in place. The Apex Committee will be comprised of Union Home Minister, Union Commerce and Industry Minister and Lieutenant Governor of J&K Union Territory and this committee will have the powers to decide upon any modification in the scheme within its overall financial outlay.
There will be a Steering Committee comprising of Secretary DPIIT, Secretary Ministry of Home Affairs, Secretary Ministry of Environment, Forest and Climate Change, Secretary MSME Ministry, representative of NITI Aayog, Additional Secretary of DPIIT, Chief Secretary of J&K and Joint Secretary of DPIIT. The mandate of this committee will be to monitor the smooth implementation and issue detailed guidelines for execution.
The UT level Committee will be headed by Chief Secretary which will put in place proper checks and balances for ensuring transparency and efficiency in grant of registration, processing and approval of claims under the scheme.
Notwithstanding the application period defined for registration, if based upon the registrations already granted, the projected financial liability reaches 115 percent of the Approved Funds, registration process may be paused, either temporarily or permanently. However, registration process may be resumed depending on availability of Approved Funds, read the notification of the Department for Promotion of Industry and Internal Trade of the Ministry of Commerce and Industry.
Merely submitting application for registration will not entitle any applicant for registration under this scheme and no unit will have the right to register under this scheme or claim the benefits unless it is specifically approved by the registering authority. All units willing to avail incentive(s) under this scheme will have to apply for registration through the online portal.
As per the notification, the service sector units with a minimum investment of Rs 1 crore in building and other durable physical assets will be eligible for incentives under this scheme and all eligible units will have to commence commercial production/operation within 3 years from the date of grant of registration.
Any investment made on or after April 1, 2019 by a unit in plant and machinery (for manufacturing sector) or construction of building and other durable physical assets (for service sector) will be taken into consideration to decide the eligible value of investment as per the entitlement under Capital Investment Incentive, Capital Interest Subvention and GST Linked Incentive of this scheme. However, the date of commencement of commercial production/ operation has to be on or after April 1, 2021. The eligibility for availing any incentive is subject to grant of registration under the scheme.
The units availing benefits under other schemes of the Government of India will not be eligible for similar incentives under the new scheme.
As far as Capital Investment Incentive is concerned, new units with investment of not more than Rs 50 crore in Plant & Machinery (for manufacturing sector) or building and all other durable physical assets (for service sector) will be eligible to avail this incentive in both Zone A and Zone B.
Likewise, the existing units undertaking substantial expansion with investment of not more than Rs 50 crore in Plant & Machinery (for manufacturing sector) or building and all other durable physical assets (for service sector) will be eligible to avail benefit under this incentive in both Zone A and Zone B. A service sector unit will be eligible for this incentive only if it makes investment of not less than Rs 1 crore in new building and other durable physical assets.
All eligible units located in Zone A category blocks in the UT of Jammu & Kashmir will be provided Capital Investment Incentive at the rate of 30% of the investment made in plant and machinery (for manufacturing sector), or for construction of building and installation of other durable physical assets (for services sector) with maximum limit of Rs 5 crore.
Similarly, all eligible units located in Zone B category blocks will be provided Capital Investment Incentive at the rate of 50% of the investment made in plant and machinery(for manufacturing), or for construction of building and installation of other durable physical assets (for services sector) with maximum limit of Rs 7.50 crore. An existing unit can avail this benefit for substantial expansion only once during the validity period of the scheme.
As far as Capital Interest Subvention is concerned, new units will be eligible for this incentive on the loan availed on investment made in eligible plant and machinery (for manufacturing sector), or construction of building and other durable physical assets (for service sector). The existing units undertaking substantial expansion will also be eligible for the incentive.
All eligible units can avail Capital Interest Subvention at the annual rate of interest of 6% for a maximum of 7 consecutive years from any date after the date of application for registration under this scheme. However, disbursement of eligible amount under this incentive will begin only after commencement of commercial production.
“In future, if the annual rate of interest falls below 8%, an eligible unit will still be liable to pay a minimum amount of interest at the annual rate of interest of 2%”, the notification said.
About Goods & Services Tax Linked Incentive, the notification said that new units registered under the scheme irrespective of the value of investment in plant and machinery (for manufacturing sector) and construction of building and other durable physical assets (for service sector) and having a GST registration will be eligible for benefit under this incentive.
All eligible units will be granted Goods & Services Tax Linked Incentive (GSTLI) equal to 100% of Gross payment of GST—-GST paid through cash and input tax credit for a maximum period of 10 years from the date of commencement of commercial production/operation or till the validity of the scheme whichever is earlier. However, GST paid on exported goods or services will not be counted towards eligible incentive amount under this component.
As far as Working Capital Interest Subvention is concerned, all existing units in the UT of Jammu & Kashmir registered under GST prior to the date of notification of this scheme will be eligible for this incentive subject to the registration and other conditions.
All existing eligible units can avail interest subvention at the rate of 5% on working capital loan for a maximum of 5 consecutive years from the date of grant of registration under this scheme. Existing eligible units availing benefits under this component will be eligible for five years period, even when they are undertaking substantial expansion.
“In case, if the annual rate of interest charged by a bank falls below 6%, a minimum amount at the rate of 1% per annum of interest will still have to be paid by the eligible units”, the notification said, adding “the maximum benefit under this component for manufacturing as well as service sector units is Rs 1 crore in 5 years”.
Jammu and Kashmir Development Finance Corporation Limited or any other agency to be authorized by the Government of India will be nodal agency for disbursal of incentives under various components of the scheme.
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