Exemptions to packing units cut

Decision will affect Himachal Pradesh and Uttarakhand.

The finance ministry has withdrawn tax exemptions to standalone packing and labelling units set up in tax-free zones of Himachal Pradesh and Uttarakhand, a move aimed at restricting such benefits to genuine manufacturing units.

In other words, units carrying out only such processes would not be eligible for tax exemptions and would be required to pay duty as per normal procedure, stated a recent circular issued by finance ministry.

Tax exemptions would not be available to industrial units engaged in packing or re-packing of goods, labelling or re-labelling of containers, declaration or alteration of retail sale price, etc, it said.

Further, to keep a tab on tax exemptions to industrial units in these hilly states, the ministry has also made it mandatory for the units availing tax exemptions in the two states to submit quarterly returns.

"Till now, the finance ministry had no information on the units availing tax exemptions and benefits to these states," said a senior finance ministry official, adding that the returns would help to fill the information gap.

This return has been prescribed in order to collect the basic details regarding the production and removal activities of such units and the transactions undertaken by them with their related units and persons, the official said.