New MSMEs may enjoy 50% VAT reimbursement

Reimbursement will be valid for 5 years from date of commercial production, capped at 100% of fixed capital investment

New industrial units in the micro, small & medium enterprises (MSME) sector may avail VAT (value added tax) reimbursement of up to 50 per cent after the finalisation of the new Industrial Policy Resolution (IPR), 2013 of the state government.

The VAT reimbursement will be valid for a period of five years from the date of starting commercial production and would be limited to 100 per cent of fixed capital investment.

The new MSMEs as well as thrust and priory sector units will also be exempted from payment of entry tax on acquisition of plant and machinery for setting up of industrial units, according to the draft IPR-2013 prepared by OMEGA TAST (Technical Assistance & Support Team) appointed by UK-based Department for International Development (DFID).

Thrust sector includes ancillary and downstream units and industries in sectors like agro-processing, automobiles, auto components, textiles and apparel. Similarity, units in information technology, tourism, bio-technology, chemicals, handicrafts, sea food processing and pharmaceuticals fall under the priority sector.

The new industrial units in the priority sector will be eligible for reimbursement for 75 per cent VAT for a period of five years from the date of starting of commercial production. The reimbursement will be limited to 100 per cent of fixed capital investment.

New industrial units in the thrust sector will be eligible for 100 per cent VAT reimbursement for a period of 10 years from the date of commencement of commercial production, limited to 200 per cent of fixed capital investment.

The draft IPR-2013 says any new industrial unit setting up a captive power plant (CPP) would enjoy 50 per cent waiver on payment of electricity duty for self-consumption. The waiver would be valid for a period of five years from the date of commissioning of the CPP.

The new non-mineral based industries setting up their units in economically backward districts would be entitled to all benefits prescribed sector provided they invest at least Rs five crore and offer direct employment to a minimum of 100 persons. The districts have been identified as Kalahandi, Nuapada, Bolangir, Sonepur, Koraput, Malkangiri, Rayagada, Nabarangpur, Kandhamal, Gajapati and Mayurbhanj.