Incentives for Industry

Economic Review, October 1991 | Go to article overview

Incentives for Industry


Tax Concession in

Budget 1991-92

Budget contains several incentives for

industries. Some incentives are as

follows:- * Tax Holiday for Educational

Institutions: In order to encourage

investment in education, it is proposed

that a 5 year tax-holiday be granted to

all educational institutions established

between 1st July, 1991 and 30th June,

1995. * Capital Gain Tax: As an incentive to

the growth of capital market the tax

exemption on capital growth gains which

expired on 30th June, 1991 is proposed

to be extended for 2 years. * Donations: At present, there is an

absolute limit on donations i.e. Rs. 5

lacs for companies and Rs. 10 lacs in

other cases. The absolute ceilings are

now being abolished. Limits on

admissibility of donations would now

be related only to the total income. The

ceilings are also being increased from

5% to 10% of total income for public

companies, from 7.5% to 10% of total

income of private companies and 25%

of total income in other cases. * Ceramic Tiles: In order to stimulate

exports of ceramic tiles and wares, the

tax rebate is being increased from 50%

to 75%.

Relief is being provided in customs

duties on a broader front which, it is

hoped will bring down the cost of

production, infuse competition, raise

efficiency and induce export bias. The

maximum rate of import duty is being

reduced from 95% to 90% on 1321

items. On 161 items it is being reduced

from 95% to 80%. On 12 items from

80% to 60%, on 7 items from 80% to

40%. These changes have been

incorporated in the Custom Tariff

against each items. * Ambulance: It is also proposed to

exempt ambulances from customs duty

and sales tax. * Hospital Equipment: It is also

proposed to grant exemption from

customs duty and sales tax on all

hospital equipment. This facility will be

available to equipment except

airconditioning, furniture and other

locally manufacture items, for hospitals

having the capacity of 20 beds or more.

This would benefit medical services

being operated in the private sector. * Blood Bank Freezes: At present, 95%

customs duty is leviable on blood bank

freezers. It is proposed to grant complete

exemption to freezers having a

temperature range of minus 30c to

minus 135c. * Defective Goods: It is also proposed

to grant complete exemption from all

import levies on goods supplied free of

charge in replacement of defective

goods. * Computer Parts: The customs duty on

computer parts is being reduced from

40% to 20%. Computer software would

be totally exempt from duty. * Domestic Appliances: At present,

customs duty in excess of 20% is

exempt on raw materials/components

imported for manufacture of domestic

appliances such as refrigerators,

deepfreezers, air-conditioners etc. To

encourage local production, this

concession is being production, this

more items such as micro-wave ovens

and cooking ranges. * Refractory Bricks: Refractory bricks

used in industrial furnaces are

chargeable to 40% customs duty and

12.5% sales tax. It is proposed to bring

this item at par with machinery. The

customs duty will be reduced to 20%

and sales tax would be abolished. * Generating Sets: Currently, generating

sets are exempt from duty in built-up

condition but not in split consignments.

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