New Central Sector Incentive Scheme for Industrial Development of Union Territory of Jammu & Kashmir

Name of the Scheme: The Government of India has announced New Central Sector Scheme for Industrial Development of Union Territory of Jammu & Kashmir.

Commencement and Duration of the Scheme: It will be effective from 01.04.2021 and will remain in force up to and inclusive of 31.03.2037.

Application period for registration: Registration shall commence from 01.04.2021 and will continue till 30.09.2024, subject to the guidelines issued in this regard.

Incentives under the Scheme: Subject to eligibility, the following incentives are provided under this scheme.

(i)  Capital Investment Incentive (CII), (ii)  Capital Interest Subvention (CIS), (iii) Goods & Services Tax Linked Incentive (GSTLI), (iv) Working Capital Interest Subvention (WCIS).

Capital Investment Incentive (CII)

• New units with investment of not more than INR 50 crore in Plant & Machinery (for manufacturing sector) or Building and all other durable physical assets (for service sector) will be eligible to avail this incentive in both Zone A and Zone B.
• Existing units undertaking substantial expansion with investment of not more than INR 50 crore in Plant & Machinery (for manufacturing sector) or Building and all other durable physical assets (for service sector) will be eligible to avail benefit under this incentive in both Zone A and Zone B.
• All eligible units located in Zone A category blocks in the UT of Jammu & Kashmir will be provided Capital Investment Incentive @30% of the investment made in plant and machinery (for manufacturing sector), or for construction of building and installation of other durable physical assets (for services sector) with maximum limit of Rs. 5.00 crore.
• All eligible units located in Zone B category blocks in the UT of Jammu & Kashmir will be provided Capital Investment Incentive @50% of the investment made in plant and machinery (for manufacturing), or for construction of building and installation of other durable physical assets (for services sector) with maximum limit of Rs.7.50 crore.

Capital Interest Subvention (CIS)

• Interest on loan up to the principal amount of Rs. 500 crore for investment in eligible plant and machinery shall be eligible for Capital Interest subvention. If the total principal amount of loan (loan being defined as a whole and not as per draw-down amount in each tranche) is more than Rupees 500 crore, then interest on the loan amount exceeding Rs. 500 crore would not be eligible for Capital Interest Subvention.
• All eligible units can avail Capital Interest Subvention at the annual rate of interest of 6% for a maximum of 7 consecutive years from any date after the date of application for registration under this scheme. However, disbursement of eligible amount under this incentive shall begin only after commencement of commercial production.

Goods & Services Tax Linked Incentive (GSTLI)

• New units registered under the scheme irrespective of the value of investment in plant and machinery (for manufacturing sector) and construction of building and other durable physical assets (for service sector) and having a GST registration will be eligible for benefit under this incentive.
• Upper limit of incentive under this component shall be 300% of the eligible value of investment made in plant and machinery (for manufacturing sector) or construction of building and other durable physical assets (for services sector).
• All eligible units will be granted Goods & Services Tax Linked Incentive (GSTLI) equal to 100% of Gross payment of GST, i.e. GST paid through cash and input tax credit for a maximum period of 10 years.
• The amount of incentive paid in a financial year will not exceed 1/10th of the total amount of eligible incentive under this component subject to full payment of GST as per GST return filed for the claim period.
• In case gross GST paid by any unit in a financial year is more than 1/10th of the total amount of eligible incentive, the balance can be carried forward to the subsequent FY(s).

Working Capital Interest Subvention (WCIS)

• All existing units in the UT of Jammu & Kashmir registered under GST prior to the date of notification of this scheme will be eligible for this incentive.
• All existing eligible units can avail interest subvention @ 5% on working capital loan for a maximum of 5 consecutive years from the date of grant of registration under this scheme.
• Existing eligible units availing benefits under this component will be eligible for 5 years period, even when they are undertaking substantial expansion.
• The maximum benefit under this component for manufacturing as well as service sector units is Rs. 1 crore in 5 years.

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