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
