Incentives to Food Processing Units
The Ministry has launched a Centrally Sponsored Scheme of National Mission on Food Processing (NMFP) in 12th Plan (2012-17) through State/UT Governments. The mission has, interalia, one of the schemes namely scheme of Technology Upgradation/ Establishment/ Modernization of Food Processing Industries. Under the above scheme of the mission, all the eligible Small and Medium entrepreneurs interested to set up food processing units are provided financial assistance @25 per cent of the cost of Plant & Machinery and Technical Civil Works, subject to a maximum of Rs. 50 lakh in general areas; 33.33 per cent of the cost of Plant & Machinery and Technical Civil Works, subject to a maximum of Rs. 75 lakh in difficult areas (i.e. Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Andaman & Nicobar Islands and Lakshadweep) and Integrated Tribal Development Project (ITDP) areas; and 50 per cent of the cost of Plant & Machinery and Technical Civil Works, subject to a maximum of Rs.100 lakh for North-Eastern States including Sikkim.
The applications for the above scheme of the mission are received, sanctioned and funds are released by the respective State/UT Governments, for setting up of Food Processing Units in the country.
In addition, Government of India provides various tax incentives to the Food Processing Industries set up by Small and Medium entrepreneurs and their units in the country including Uttar Pradesh.
1. Income Tax:
1.1. Deduction of expenditure: These incentives are allowed for the following businesses for the investment made in the previous year and prior to commencement of its operations:
1.1.1. Businesses allowed 100% deduction:
(a) Setting up and operating a cold chain facility.
(b) Setting up and operating warehousing facility for storage of agricultural produce.
1.1.2. Businesses allowed 150% deduction (provided the taxpayer has commenced its business on or after 01.04.2012):
(a) Bee-keeping and production of honey and bees wax.
(b) Setting up and operating a warehousing facility for storage of sugar.
1.2. Deduction of Tax from profit: This tax incentive is available at the rate of 100% tax exemption for the first 5 years of operations. After 5 years, it is at the rate of 25% of the profits. However, in case of a company, rate of tax is 30% of profits, after 5 years of operations. This benefit is available only for ten years provided that such business had commenced with effect from 01.04.2001. This incentive is provided for new units in the business of processing, preservation & packaging of fruits or vegetables, meat & meat Products, poultry, marine or dairy products. However, in case of business relating to meat, meat products, poultry, marine products or dairy products, the above incentive is available to only those units who have started their production after 01.04.2009.
2. Service Tax:
2.1. Negative list: Service tax is not leviable on items contained in the negative list. These are services including processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market.
2.2. Exempted category: Exemption from Service Tax is allowed for following services:
(i) Construction, Erection, Commissioning or installation of original works pertaining to post-harvest storage infrastructure for agricultural produce including Cold storages for such purposes.
(ii) Mechanized Food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages; and
(iii) Services provided by a goods transport agency by way of transportation of fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage.
(iv) Services of Loading, unloading, packing, storage or warehousing of agricultural produce.
3. Customs Duty:
3.1. Government has provided following Project Import benefits:
(i) Projects for the installation of mechanized food grain handling systems and pallet racking systems in ‘Mandis’ and Warehouses for food grains and sugar;
(ii) Cold storage, cold room (including for farm level pre-cooling) or industrial projects for preservation, storage or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat.
Consequently, all goods related to Food Processing, imported as part of the project, irrespective of their tariff classification, would be entitled to uniform assessment at concessional customs duty of 5% plus CVD as applicable.
3.2. Customs duty on Hazelnuts has been reduced from 30% to 10%.
3.3. Customs Duty on De-hulled Oat grains has been reduced from 30% to 15%.
4. Central Excise Duty:
In order to promote food processing industry, the Government has given following concessions in Central Excise Duty from time to time:
4.1. Food Products:
(i) Nil excise duty in milk, milk products (Chapter 4), vegetables (Chapter 7), nuts & fruits, fresh & dried (Chapter 8).
(ii) As against standard excise duty of 12%, Processed Fruits & Vegetables (Chapter 20) carries a merit rate of 2% without CENVAT or 6% with CENVAT.
(iii) Soya Milk Drinks, Flavoured Milk of Animal origin also carry a duty of 2% without CENVAT or 6% with CENVAT.
(iv) Excise duty on “Tapioca Starch manufactured and captively consumed within the factory of their production, in the manufacture of Tapioca Sago (Sabudana)” and excise duty on Tapioca Sago (Sabudana) has been reduced to nil in the Budget 2013-14.
4.2. Food Processing Machineries:
(i) All Refrigeration Machineries and parts used for installation of Cold storage, Cold room or Refrigerated Vehicle, for the preservation, storage , transport or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat are exempted from Excise Duty.
(ii) Pasteurising, drying, evaporating, etc. machinery used in Dairy sector is exempted from Excise Duty.
This information was given by the Minister of State for Food Processing Industries Dr. Sanjeev Kumar Balyan in a written reply in the Lok Sabha today.
Source: PIB
The Ministry has launched a Centrally Sponsored Scheme of National Mission on Food Processing (NMFP) in 12th Plan (2012-17) through State/UT Governments. The mission has, interalia, one of the schemes namely scheme of Technology Upgradation/ Establishment/ Modernization of Food Processing Industries. Under the above scheme of the mission, all the eligible Small and Medium entrepreneurs interested to set up food processing units are provided financial assistance @25 per cent of the cost of Plant & Machinery and Technical Civil Works, subject to a maximum of Rs. 50 lakh in general areas; 33.33 per cent of the cost of Plant & Machinery and Technical Civil Works, subject to a maximum of Rs. 75 lakh in difficult areas (i.e. Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Andaman & Nicobar Islands and Lakshadweep) and Integrated Tribal Development Project (ITDP) areas; and 50 per cent of the cost of Plant & Machinery and Technical Civil Works, subject to a maximum of Rs.100 lakh for North-Eastern States including Sikkim.
The applications for the above scheme of the mission are received, sanctioned and funds are released by the respective State/UT Governments, for setting up of Food Processing Units in the country.
In addition, Government of India provides various tax incentives to the Food Processing Industries set up by Small and Medium entrepreneurs and their units in the country including Uttar Pradesh.
1. Income Tax:
1.1. Deduction of expenditure: These incentives are allowed for the following businesses for the investment made in the previous year and prior to commencement of its operations:
1.1.1. Businesses allowed 100% deduction:
(a) Setting up and operating a cold chain facility.
(b) Setting up and operating warehousing facility for storage of agricultural produce.
1.1.2. Businesses allowed 150% deduction (provided the taxpayer has commenced its business on or after 01.04.2012):
(a) Bee-keeping and production of honey and bees wax.
(b) Setting up and operating a warehousing facility for storage of sugar.
1.2. Deduction of Tax from profit: This tax incentive is available at the rate of 100% tax exemption for the first 5 years of operations. After 5 years, it is at the rate of 25% of the profits. However, in case of a company, rate of tax is 30% of profits, after 5 years of operations. This benefit is available only for ten years provided that such business had commenced with effect from 01.04.2001. This incentive is provided for new units in the business of processing, preservation & packaging of fruits or vegetables, meat & meat Products, poultry, marine or dairy products. However, in case of business relating to meat, meat products, poultry, marine products or dairy products, the above incentive is available to only those units who have started their production after 01.04.2009.
2. Service Tax:
2.1. Negative list: Service tax is not leviable on items contained in the negative list. These are services including processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market.
2.2. Exempted category: Exemption from Service Tax is allowed for following services:
(i) Construction, Erection, Commissioning or installation of original works pertaining to post-harvest storage infrastructure for agricultural produce including Cold storages for such purposes.
(ii) Mechanized Food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages; and
(iii) Services provided by a goods transport agency by way of transportation of fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage.
(iv) Services of Loading, unloading, packing, storage or warehousing of agricultural produce.
3. Customs Duty:
3.1. Government has provided following Project Import benefits:
(i) Projects for the installation of mechanized food grain handling systems and pallet racking systems in ‘Mandis’ and Warehouses for food grains and sugar;
(ii) Cold storage, cold room (including for farm level pre-cooling) or industrial projects for preservation, storage or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat.
Consequently, all goods related to Food Processing, imported as part of the project, irrespective of their tariff classification, would be entitled to uniform assessment at concessional customs duty of 5% plus CVD as applicable.
3.2. Customs duty on Hazelnuts has been reduced from 30% to 10%.
3.3. Customs Duty on De-hulled Oat grains has been reduced from 30% to 15%.
4. Central Excise Duty:
In order to promote food processing industry, the Government has given following concessions in Central Excise Duty from time to time:
4.1. Food Products:
(i) Nil excise duty in milk, milk products (Chapter 4), vegetables (Chapter 7), nuts & fruits, fresh & dried (Chapter 8).
(ii) As against standard excise duty of 12%, Processed Fruits & Vegetables (Chapter 20) carries a merit rate of 2% without CENVAT or 6% with CENVAT.
(iii) Soya Milk Drinks, Flavoured Milk of Animal origin also carry a duty of 2% without CENVAT or 6% with CENVAT.
(iv) Excise duty on “Tapioca Starch manufactured and captively consumed within the factory of their production, in the manufacture of Tapioca Sago (Sabudana)” and excise duty on Tapioca Sago (Sabudana) has been reduced to nil in the Budget 2013-14.
4.2. Food Processing Machineries:
(i) All Refrigeration Machineries and parts used for installation of Cold storage, Cold room or Refrigerated Vehicle, for the preservation, storage , transport or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat are exempted from Excise Duty.
(ii) Pasteurising, drying, evaporating, etc. machinery used in Dairy sector is exempted from Excise Duty.
This information was given by the Minister of State for Food Processing Industries Dr. Sanjeev Kumar Balyan in a written reply in the Lok Sabha today.
Source: PIB
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