Close on the heels of the ₹1.25 lakh crore package for Bihar, the Centre today extended additional special assistance to the poll-bound State to boost its growth.

This has taken the form of tax incentives (additional depreciation and investment allowance) to new manufacturing units set up in specified backward areas. For this, the Finance Ministry has notified 21 districts as ‘backward areas’.

The 21 notified districts are Patna, Nalanda, Bhojpur, Rohtas, Kaimur, Gaya, Jehanabad, Aurangabad, Nawada, Vaishali, Sheohar, Samastipur, Darbhanga, Madhubani, Purnea, Katihar, Araria, Jamui, Lakhisarai, Supaul and Muzaffarpur.

Finance Minister Arun Jaitley had in this year’s Budget speech promised that special assistance on the lines extended to Andhra Pradesh and Telangana would be provided to Bihar and West Bengal.

The latest Finance Ministry announcement says manufacturing enterprises set up (in the notified 21 district areas) between April 1, 2015 and March 31, 2020 will be entitled to claim additional depreciation of 35 per cent. This will be over and above the usual 15 per cent depreciation allowed under the Income Tax Act for plant and machinery.

Further, a manufacturing company will be eligible for 30 per cent (instead of 15 per cent) investment allowance if the investment in new plant and machinery during April 1, 2015 to March 31, 2017 exceeds ₹25 crore.

Nasscom President R Chandrashekhar said that so far there had been no investments in some of the States (including Bihar). However, with the government working on a policy to support IT industry in new States, it is an important and necessary step for the Indian business process management industry, he added.

Srivats.kr@thehindu.co.in

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