Location Based Incentives: Doing Business in Rajasthan

A. The Rajasthan Investment Promotion Scheme 2010
Applicability: The Scheme offered by the state government, except for ineligible enterprises, is applicable to New Enterprises, Existing Enterprise making investments for Modernization /Expansion/ Diversification, Sick industrial enterprise for its revival and Enterprise which has set up Project for Common Social Good as defined under the Scheme; however subject to the condition that the Enterprise shall commence commercial production or operation during the operative period of the Scheme and meet conditions of minimum investment and minimum direct employment.
Validity: The Scheme has come into effect from 25.08.2010 and shall remain in force up to 31st March, 2018.

Highlights of the Incentive:
Mr. Manoj Kumar
Vice President
+919910688433
manoj@indiacp.com
1. Investment Subsidy Employment Generation Subsidy: Under the scheme, Subsidy consisting of Investment Subsidy and Employment Generation Subsidy shall be allowed for a period of seven
years (Ten years for MSME located in notified area) The maximum amount of subsidy shall be 50% of the total tax(es) that is VAT and CST or SGST (whenever introduced), which have become due and have been deposited into the government exchequer, however, an Additional Subsidy to the extent of 10% of the amount of said tax (es) which have become due and have been deposited into the government exchequer shall be allowed to Women/SC/ST/Person with disability (PwD) entrepreneur, by way of additional investment subsidy.
2. Other Exemptions:
  • 100% exemption of Luxury Tax for seven years (Ten years for MSME located in the notified area) 50% exemption of Electricity Duty, Entertainment Tax, Land Tax and Mandi fee for seven years (Ten Years for MSME located at notified area).
  • 50% exemption of Stamp Duty on purchase or lease of land and construction/improvement on such land (one time for each such transaction for the same project).
  • 50% exemption of Conversion charge payable for change of land use (one time for each such transaction for the same project)
3. Customized Packages to the following Enterprises:
New Enterprises having investment of more than Rs. 500 crore and providing minimum employment to 200 persons;
Enterprises having potential of very high employment generation; and
Enterprises having special importance for the state as referred by Industries Department

4. Interest Subsidy
  • Interest Subsidy of 5% would be provided where any loan borrowing has been obtained from any schedule commercial bank for creation of fixed assets and shall not include working capital loan, overdraft and current liabilities. 
  • An additional Subsidy of One percent shall be available to Schedule Caste/Schedule Tribe Entrepreneurs. However in case of lesser amount of interest the subsidy would be limited to lesser amount of interest.
  • The sum total of both the wage and interest subsidy would be subject to the maximum limit of fifty percent of the tax payable under Rajasthan Sales Act, 1994, the Central Sales Act, 1956 and Value added Tax Act. This limit could be exceeded in the following cases:
                    In case of investment exceeds 100 Crores but is less than or equal to 200 Crores,
                     the maximum amount of subsidy would be 60%
                    In case of investment exceeds 200 Crores, then the maximum amount of subsidy would be 75%
    • Both Wage and Interest subsidy would be available for a period of seven years. In case of SEZ units located in backward or rural areas the subsidy would be available for 10 years In case of existing units the amount of subsidy shall be subject to the maximum limit of fifty percent of the additional tax payable under Rajasthan Sales Act, 1994, the Central Sales Act, 1956 and Value added Tax Act payable and deposited over and above the highest tax payable or deposited whichever is higher in any of 3 immediately preceding years.
    • In addition to these subsidies the following exemption would be provided
                      o 100% exemption of luxury tax for 7 years
                        o 50% exemption of entertainment tax for 7 years.
                          o 50% exemption of electricity duty for 7 years.
                            o 50% exemption from stamp duty
                              o 50% exemption from conversion charge
                                o 50% exemption from mandi tax for 7 years
                            In case of Micro and small enterprises located in rural areas not covered in the Municipalities, Municipal corporations, and Urban development authorities and purchases the plant and machinery for setting of enterprises on or after 14.02.2008 the electricity duty exemption would be 75%.

                            INDUSTRY SPECIFIC INSENTIVES: FOOD INDUSTRY, AGRO-PROCESSING AND AGRICULTURE BUSINESS

                            • Incentives admissible under the Rajasthan Investment promotion Scheme, as amended from time to time.
                            • Additional Incentives under this policy;
                                           o Incentive for new Employment Creation
                                             o Electricity Duty Concession; 50% exemption for 7 years
                                               o Stamp Duty Concession: 50% exemption in Food Parks
                                                 o Concession on land related issues
                                                   o Incentive for market development and diversification
                                                               Conversion of land: SDO to convert upto 10 hectares
                                                               Simplified Conversion process in designated agro processing zones
                                                                  Government land on lease basis: Allotment at 10% of the prevailing DLC rate for 
                                                                      projects  with the new technology
                                                                  Exemption from Agricultural Land Ceiling Act
                                                           o Incentive for quality and standards
                                                             o Concession on direct purchase and market fee
                                                               o Incentive for new project development
                                                                 o Incentives for early bird Projects: Projects with investment of Rs. 25.00 crores or more 
                                                                  which come into commercial production before 31.03.2012 will be eligible for enhanced
                                                                  incentives.

                                                  Exemption from Agricultural Land Ceiling Act
                                                  • Incentive for quality and standards
                                                  • Concession on direct purchase and market fee
                                                  • Incentive for new project development
                                                  • Incentives for early bird Projects: Projects with investment of Rs. 25.00 crores or more which come into commercial production before 31.03.2012 will be eligible for enhanced incentives.

                                                  Income Tax Exemption for Agro/Food Industries

                                                  An undertaking deriving profit from the business of processing, preservation, and packaging of fruits or vegetables or meat and meat products or poultry or marine or dairy product or from the integrated business of handling, storage and transportation of food grains shall be eligible for 100% deduction for first five years and thereafter 25% for 10 years.

                                                  INFORMATION TECHNOLOGY INDUSTRY

                                                  State’s Information Technology Policy 2007
                                                  Major Incentives are:
                                                  IT and ITES Policy 2007
                                                            Subsidy/Exemptions and Incentives:
                                                                To encourage establishment of IT SMEs in Rajasthan a subsidy up to Rs. 25 lacs at the rate of  Rs. 10,000 per employee would be given to the first five IT/ITES  companies investing in the  state and directly employing more than 50 employees in IT or 100 employees in ITES Sector
                                                               50% exemption from Stamp Duty
                                                                VAT rationalized at par with the minimum floor rate of 4%
                                                                50% exemption from the payment of Electricity duty for 7 (seven) years to new units
                                                                Special Packages of Concessions and facilities to Information Technology (IT) Units like, rebate in land cost in designated parks by way of refund upto 60%

                                                  CEMENT INDUSTRY

                                                                In case of cement plant established in jaiselmer district having minimum capacity of 3 million 
                                                                tons per annum and minimum investment of Rs. 100 crores, the period of interest and the 
                                                                wage subsidy would stand raised to 12 years.

                                                  SPECIAL ECONOMIC ZONES

                                                               Duty free import/ domestic procurement of goods for development, operation and maintenance 
                                                               of SEZ units
                                                                100% Income Tax exemption on export income for SEZ units for first 5 years and 50% for 
                                                               next  five years and 50% of the ploughed back export profit for next 5 years
                                                                ECB by SEZ Units upto US $500 million in a year without any maturity restriction 
                                                               through  recognized Banking Channels
                                                                Exemption from Central Sales Tax
                                                               Exemption from Service Tax
                                                               Single Window clearance for Central and State level approvals
                                                                SEZs are exempted from land ceiling
                                                                Land Conversion @ Rs. 100/- in Rural areas for SEZ
                                                               100% exemption from luxury tax for 7 years
                                                                50% exemption from entertainment tax for 7 years

                                                  TEXTILE INDUSTRY

                                                              In case of textile sector, the maximum limit of interest subsidy shall stand raised to 60% instead
                                                              of the 50% in case of investment of more than 50 crores but less than or equal to
                                                              100 crores and to 75% in case where investment exceeds Rs. 100 crores.
                                                              New units of textiles industries manufacturing or processing fibres, yarn, fabrics 
                                                              including ginning, weaving and processing thereof shall be entitled to claim 75% exemption  of electricity duty for seven years.
                                                                                                                      Source: www.investrajasthan.com, www.business.gov.in 

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