Govt extends Target 2000 scheme to March 2005

Revenue Department, which has been opposing move, bypassed

The Andhra Pradesh government, through a recent order, has extended the industrial incentive scheme "" Target 2000 "" up to March 2005. The original scheme, formulated by the previous regime, provided for sops to those units that commenced production between May 1995 and March 2002.

However, it was not known as to how many new units would be found eligible in order to avail of these incentives as the Industries Department is supposedly yet to finalise certain guidelines, even as the government order (GO) extending the scheme has already been issued.

"The effective implementation of the order will take a few more days time as we are in the process of finalising certain guidelines in consultation with the commissioner of Commercial Taxes," an Industry Department source told Business Standard.

Interestingly, the Revenue Department, which has been opposing such a move for the past two years citing it as an unnecessary retrospective measure, seems to have been bypassed for obvious reasons.

According to highly placed sources, the file pertaining to the proposed extension of Target-2000 was directly circulated to chief minister Y S Rajasekhara Reddy by the Industries Department, without consulting the Revenue Department.

The incentives under this scheme include tax holiday/deferment, limited to 135 per cent of the fixed capital investment; an investment subsidy of 20 per cent of the fixed capital investment (not exceeding Rs 20 lakh); rebate in electricity charges among others. The past order contains the list of eligible and ineligible industries for the Target-2000 scheme.

Under the tax holiday/deferment scheme, the government in the past had extended over Rs 8,000-crore sales tax incentive to 3,000 odd companies.

Though the tax holiday ended by March 2002, for the period of seven years as was announced in the scheme, several companies are still availing of the deferment scheme as the scheme period is for 14 years. Tax incentive beyond 135 per cent is also considered for strategically important mega projects with an investment of over Rs 100 crore.

In a recent meeting, the Group of Ministers on the Value Added Tax (VAT) Bill, had resolved to convert the provision of tax holiday into tax deferment in the new tax regime, which comes into effect from April 2005.

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Sops galore

• Industries Department yet to finalise certain guidelines, even as the GO extending the scheme has already been issued
• Incentives include tax holiday/deferment, limited to 135% of the fixed capital investment; an investment subsidy of 20% of the fixed capital investment (not exceeding Rs 20 lakh) among others