What is Incentivize tax
The details about Incentivize tax are explained here.
Incentivize tax
I. In order to attract new investments, develop infrastructure and promote export/ industries, India offers various incentives such as tax holidays, investment allowances, tax credits, rebates and so on
II. Prior to expansion/ new investments, companies should evaluate and avail of available incentives to obtain tax synergies. Some of the incentives could be available to existing as well as new businesses
Location based
a) Tax holiday in specified locations, viz., the Northeastern regions of India
b) State-level incentives
Activity based
a) Export from SEZ units
b) Various indirect tax benefits/refunds, etc
Export linked
a) Benefit for R&D expenditure
b) Employment of new workmen
c) SEZ developer
d) Business of collecting and processing biodegradable waste
e) Project Import Scheme for initial set-up or substantial expansion of specified projects
Industry specific
a) Infrastructure and power facilities
b) Oil and gas
c) Cold chain and warehousing
d) Hospitals
e) Fertilizer production
f) Affordable housing project schemes
g) Hospitality and tourism, etc.
Specific incentives — state level
Land related
a) Stamp duty waiver/concessions
b) other concessions on registration charges, property
Taxes, conversion charges, etc.
c) Single-window clearance
Infrastructure
a) Electricity duty exemption
b) Rebates in tariffs for electricity/water/gas
c) Subsidies on clean manufacturing technology, pollution
d) Control, etc.
Capital investment and employment
a) VAT/CST-linked subsidies/soft loan/exemption
b) Exemption or refund of entry taxes
c) Subsidies linked to social security contributions (PF/ESI)
d) Other subsidies (technology, transport, etc)
e) Special incentive package for mega projects
Special zone incentives
Customs duty
a) Customs duty exemption on goods imported for authorized operations
b) Customs duty not payable on goods exported by a unit to any place outside India (though customs duty is payable on a sale to the DTA)
c) No specific approval/license required for imports
Excise duty
a) Excise duty exemption on all goods brought from the DTA into an SEZ Unit to carry out authorized operations
b) Goods manufactured by an SEZ unit not liable to excise duty (but clearances are subject to customs duty)
Value-added tax
a) VAT exemption on the purchase of goods within the state in most of the states
b) Exemption from CST on the inter-state purchase of goods used for authorized operations
Service tax
a) Upfront exemption from service tax for services received by the SEZ for authorized operations
b) Other services not exclusively used for authorized operations eligible for service tax refund, subject to conditions
c) Output services provided by SEZ zero rated if services qualify as “export of service”
Export linked
Schemes:
EOU
Exemption/Refund of various indirect taxes such as customs duty, excise duty and CST on the procurement of capital goods and inputs (as the case be) for permitted operations
EPCG
Allows duty-free procurement of capital goods by exporters, subject to the fulfilment of export obligation and other specified conditions
AA/DFIA
Permit the import of inputs without customs duty, subject to the fulfilment of value-added norms and export obligation
SFIS
Available to specified service providers having service exports of INR1 million or more – for import/procurement of spares, office equipment, furniture and consumables
Post export benefit allowed by way of duty credit scrip equivalent to 10% of the net foreign exchange earned in the current financial year
Duty drawback
Post export benefit to allows rebate of taxes and duty paid on inputs and input services used in the manufacture of exported goods at prescribed rates
FPS/FMS
Post export benefit allowed by way of duty credit scrip equivalent to a specified percentage of the FOB value of exports of specified products to any country/all products to notified countries
Industry specific
Deduction for capital expenditure
a) Deduction for capital expenditure (excluding land, goodwill, financial instrument) incurred wholly for specified business
b) Covered expenditure: capital expenditure prior to the commencement of operations and capital expenditure capitalized as on the date of commencement of operations
c) Asset in respect of which a deduction is claimed and allowed shall be used only for the specified business for a period of eight years
Quantum of Deduction
150% deduction of capital expenditure on:
a) Cold-chain facility and warehouse facility for the storage of agricultural produce
b) Building and operating a hospital (specified parameters)
c) Developing and building a housing project (affordable housing – under specified scheme)
d) Production of fertilizers in India
100% deduction of capital expenditure on:
a) Building and operating a hotel (of two-star and above category)
b) Developing and building a housing project (slum re-development)
c) Setting up and operating an inland container depot or a container freight station (w.e.f 1 April 2013)
d) Bee-keeping/production of honey and beeswax (w.e.f 1 April 2013)
e) Setting up and operating a warehouse facility for storing sugar (w.e.f 1 April 2013)
f) Laying and operating a slurry pipeline for the transportation of iron ore (w.e.f 1 April 2014)
g) Setting up and operating a semi-conductor wafer fabrication manufacturing unit (w.e.f 1 April 2014)
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