Gujarat Government has introduced a Scheme for financial assistance to Plastic industry by way of Interest Subsidy and VAT incentive. Interest Subsidy and VAT incentive to Plastic industry came into force from the date 01.01.2015 and will remain in operation for a period of five years.
Who is eligible?
The New Start Up which are registered as an industrial unit as MSME with respective DIC are and obtained IEM form GOI (Udyoga adhaar) are eligible to get benefit under the scheme for following purpose:
- The New Enterprises, which is engaged in manufacturing of plastic products / items / articles by using plastic as a raw materials purchased within the state only, is eligible.
- The enterprise that has availed assistance under this scheme will not be entitled to avail benefit under any other scheme of State Government, unless and otherwise specified under that scheme.
Interest subsidy to Start up in Plastic Industry
- Interest subsidy up to 7% of term loan Maximum limit of Rs. 100 lakhs per annum, for 5 years. for fixed capital investment in building, new plant & machinery, equipment (including cost of installation, erection, transportation, electrification) and other related assets required for the manufacturing of the product. However, cost of land and land development will not be eligible.
- Plastic material means organic polymers of high molecular mass from petrochemicals such as Polyolefin (LLDPE, LDPE, HDPE, PP), PVC, Nylon, Polyesters, Polystyrene, Polycarbonate, Polyamide (Nylon 6, Nylon 66) etc.
VAT Incentive to Start up in Plastic Industry
- The eligible new enterprise will be reimbursed @ of 80% of the net VAT paid for 5 years from date of commercial production. The VAT reimbursement amount would be 70% of eligible fixed capital investment. (excluding additional Tax and reduction of ITC as per the provision of the GVAT Act 2003)
- The eligible unit shall be entitled for reimbursement up to 1/5th of eligible limit in a particular year.
Condition for Interest subsidy to Start up in Plastic Industry
- The new enterprise has to apply for interest subsidy from the date of first disbursement of the term loan from financial institution.
- The interest subsidy will be given to the new enterprise which pays regular installments and interest to the financial institutions. If the enterprise becomes defaulter, it will not get interest subsidy for the default period and such defaulting period will be deducted from 5 years period.
- New enterprise which has obtained first disbursement and started commercial production during the operative period of the scheme will eligible for interest subsidy and VAT incentive from the date of production.
Condition for VAT Incentive to Start up in Plastic Industry
- The eligible unit shall pay the net VAT payable under the provisions of the Gujarat VAT Act,2003 in the Government treasury.
- The amount paid on account of additional tax and reduction of ITC as per the prevision of the GVAT Act, 2003 shall not be reimbursement.
- The reimbursement will be available for a period of 5 years from the dated of production, the eligible unit shall be entitled for reimbursement up to 1/5th of eligible limit in a particular year
- Reimbursement of the incentive is not eligible again claimed by subsequent dealers by way of tax credit for interstate sales, branch transfer, consignment and exports.
- The eligible unit shall manufacture the goods in its own unit for which it is eligible for incentives.
- The eligible unit shall not transfer its business during the incentive period, nor assign its rights and responsibilities to any other agency.
- The eligible unit shall have remained in production during the incentive period.
- The scheme shall be reviewed the GST regime, but the total of assistance shall not exceed that available under this scheme.
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Rajesh is a Founder and MD of Adroit Corporation Pvt Ltd, Rajkot. His area of expertise is a Income Tax, VAT, Service Tax and Financial Planning. Apart from his passion for Project Finance, he also holds an avid interest in Reading, Technology & Politics.