Financial Incentives for Food Processing Sector

food processing

Many financial incentives are implemented by the Government of India for selling an investment in the Food Processing sector. Any of the key incentives are discussed below:

Section 80-IB of the Income-tax Act 1961:

Section 80-IB of the Income-tax Act, 1961 offers a deduction for income and gains derived by using eligible corporations. One of the eligible corporations is business of processing, protection, and packaging of the end result, veggies, meat, meat products, hen, marine, dairy products or the integrated commercial enterprise of managing, storage, and transportation of food grains.

The reduction that has been distinctive for the previous corporations is as follows:

  • 100% of income and profits derived: First 5 years (starting in the year wherein the challenge commences task the eligible enterprise)
  • 100% of income and profits derived: First 5 years (beginning in the 12 months in which the venture commences undertaking the eligible enterprise
  • 25% of profits and gains derived: Next five years

Investment-connected deduction beneath phase 35-AD of the Income-tax Act, 1961:

Section 35-AD of the Income-tax Act, 1961 offers an investment-linked deduction for capital expenditure incurred wholly and completely for the cause of ‘detailed companies’. Depending on the required commercial enterprise for which the capital expenditure is incurred, a deduction of 100% or weighted deduction of a 150% is to be had underneath this segment.

Goods and Services Tax (GST)

GST, an indirect tax delivered in India on 1 July 2017, is applicable throughout us of a. It has subsumed inside itself the multiple cascading taxes levied via the Central and State Governments.

Under GST, items and services are taxed on the fees of 0%, 5%, 12 %, 18%, and 28%. Ministry of Food Processing and Industries (MoFPI) has undertaken several projects for the improvement of the Food Processing quarter, together with streamlining rates for products underneath the GST regime. The weblink under highlights numerous applicable rates.

Project Import Scheme

The Project Imports Scheme is a scheme underneath the Indian customs regulation underneath which goods imported for the purpose of setting-up of commercial projects or giant expansion of an existing commercial venture are eligible for a single price of concessional simple customs.

Import of products below this scheme facilitates smooth and short assessment thru a simplified process of class and valuation, and by placing the products imported under an unmarried tariff type code.

Projects eligible for concessional customs obligation charges below this scheme encompass commercial flowers, irrigation projects, and power projects among others.

Duties and taxes relevant beneath the Project Imports scheme

  • The simple customs duty charge for goods imported underneath the Project Imports Scheme is 5%, as typically relevant for food processing tasks.
  • However, for sure exact projects, the simple customs responsibility charge is 0%.
  • Prior to 1 July 2017, Countervailing Duty (CVD) on the import of goods underneath this scheme became relevant and the CVD fee was equal to the excise responsibility fee applicable for the respective goods. Hence, the CVD charge for items imported under this scheme varied relying on their classification underneath the Central Excise Tariff.
  • After the creation of GST, goods imported underneath this scheme will be classified under chapter 98.01 and be prone to IGST at 18%.
  • MoFPI has been exactly as the sponsoring authority underneath this scheme for projects which include commercial tasks for renovation, storage or processing of agricultural, agricultural, dairy, chicken, and meat, in addition to indifferent storage and cold room projects.

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