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As many as 4,284 industrial units in the North East and Himalayan States will get GST relief in the form of refund of Central share of CGST and iGST.
The Cabinet Committee on Economic Affairs (CCEA) on Wednesday gave its nod for a new scheme to refund the Central share of Central GST (CGST) and integratedGST (iGST) to these units in lieu of the excise exemption lost due to the onset of goods and services tax (GST) and scrapping of excise laws from July 1 this year.
A budgetary support of ₹27,413 crore for this scheme has been approved for the period from July 1, 2017 till March 31, 2027, Finance Minister Arun Jaitley told reporters here after a Cabinet meeting. He said the Department of Industrial Policy & Promotion (DIPP) will notify the scheme, including detailed operational guidelines for implementation within six weeks.
The 4,284 eligible industrial units were granted excise duty exemption for the first 10 years after commencement of commercial production under the North East Industrial and Investment Promotion (NEIIPP) 2007 and package for special category States for Jammu & Kashmir, Uttarakhand and Himachal Pradesh to promote industrialisation.
“Upon repeal of the Central excise duty laws, the government has decided to refund the Central share of CGST and iGST to the affected industrial units for the residual period in the States of North Eastern region and Himalayan States,” Jaitley said.
Under the scheme, if the Centre collects, say, ₹100 in the form of CGST and iGST, then the aggregate refund will only be ₹58, that being the Centre’s share under the devolution formula approved by the Finance Commission, he said.
MS Mani, Partner-GST, Deloitte in India, welcomed the decision to refund GST to units in exempted zones enjoying excise exemption.
“It is now expected that the few States that have granted VAT exemption would also announce the manner and methodology for refund of the SGST component of the GST paid,” he told BusinessLine .
For all FMCG manufacturers who enjoyed excise and VAT exemption in the past, GST introduction has led to multiple challenges in terms of product pricing, raw material sourcing, adherence to anti-profiteering requirements etc.
“These are matters that have a significant bearing on their profitability and market share and, hence, such units would be expecting a comprehensive declaration of the policies governing exemptions – both Centre and State,” Mani said.
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