The changes would help the automobile, engineering and food processing sectors, which stand to lose 2% tax refund under integrated GST.
The Maharashtra government is tweaking its package scheme of incentives to help companies and sectors affected by the rollout of goods and services tax (GST), but plans to retain the annual outgo under the scheme at Rs 3,000 crore.
The changes would help the automobile, engineering and food processing sectors, which stand to lose 2% tax refund under integrated GST.
These industries were refunded 2% tax paid for sale of products outside Maharashtra since 2013, under the scheme which seeks to protect investor interest and attract new investments.
The government proposes to refund 2% IGST by increasing the timeline of the package scheme of incentives, which is provided for five to 20 years, depending on the scale of industry and its investments.
The ultra-mega and mega industries with an investment of Rs 1,500 crore and above get incentives for 20 years, while medium-scale units get it for 10 years and small units up to five years. As per the revised scheme, such units will continue to get incentives beyond the stipulated timeline so that they do not lose out.
State industries minister Subhash Desai told DNA Money, "The department of industries has framed revised policy which will be soon placed before the Cabinet for its approval. Efforts have been made to restore incentives offered to the investors.''
A government official said, "Under the package scheme of incentives if the company sells products outside Maharashtra it was getting 2% tax refund, which it stands to lose under GST. About 80% sale of automobile sector is outside Maharashtra. Same is the case of engineering sector. The government has received representations from automobile and engineering sectors requesting continuation of benefits they were getting before the launch of GST.''
He said the government therefore has devised a formula whereby incentives will be staggered wherein industries will continue to get the benefit beyond the stipulated timeline.
The official said the government proposes to provide refunds to micro, small and medium scale industries as per the value of the sale.
The state finance department has objected to providing additional money to fulfil commitment under the package scheme of incentives. "The finance department has estimated an additional burden of Rs 500 crore if refund towards 2% IGST has to be restored. However, the department of industries has argued that it won't be at one go, but the government may have to make available Rs 150 crore annually in a staggered way,'' the official said.
INCENTIVE SCHEME
- The government proposes to increase the timeline of the package scheme of incentives, which range five years to 20 years
- The changes would help the automobile, engineering and food processing sectors, which sell outside the state
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