Shimla: Putting an end to excise exemptions for peripheral industrial activities, the central government on Friday amended the area-based excise exemption benefit for Himachal Pradesh and Uttarakhand.
Excise and income tax exemptions were granted to these two states and also special category states in the north east and Jammu and Kashmir in 2003 by the NDA government to promote industrial activities. An official communique stated, ‘‘In order to ensure genuine industrial activities in these regions (Himachal Pradesh and Uttarakhand) it has been decided that benefits of duty exemption should not be admissible to goods in respect of which only peripheral activities like preservation during storage, cleaning operations, packing, re-packing, labelling or re-labelling, sorting, alteration of retail sale price, etc take place.’’
The order comes into effect from January 18 and is applicable to all existing, upcoming or proposed units involved in such operations. An industry department official, on conditions of anonymity said, ‘‘If such a notification has been issued, many industries, especially in the pharmaceutical sector, could be hit badly.’’
It may be mentioned that many states, including Punjab, Haryana, Gujarat, Andhra Pradesh and Tamil Nadu, have been objecting to the excise exemptions
permitted especially to the pharmaceutical industry in HP and Uttarakhand.
The communique further explained that the exemptions were intended to encourage industrial development by creation of basic infrastructural facilities and to generate employment opportunities for the local people. ‘‘The new excise regime would ensure that the intended purpose of promoting substantial industrial manufacturing activities through grant of fiscal incentives is fully met,’’ it stated.