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India By State - Madhya Pradesh - Taxation & Legalities




Taxation & Legalities

Policies & Incentives

The Industrial Promotion Policy would be effective for 5 years from 1st April 2004. The new policy envisages creating an Industry-friendly Administration, maximizing employment opportunities, tackling industrial sickness, rationalizing rates of commercial taxes and bolstering private sector participation. Individuals and communities are at the centre of all developmental enterprises and policy priorities in Madhya Pradesh.

The strength of the State lies in the strong telecom infrastructure available through both public and private basic service providers and the strategic location at the heart of India. Madhya Pradesh has some of the finest institutions in telecommunications, electronics and management, which not only have current and prospective utility, but also have a cadre of alumni many of whom are Non Resident and Resident entrepreneurs and IT professionals. The number of private institutions in the training sector as well as public institutions is offered Madhya Pradesh as a source for low cost competent human resources.

Political stability, high quality social infrastructure and quality of life, tranquil public order, and a progressive and forward looking policy environment are strengths that few States in India can match. These strengths would be converted and exploited as opportunities.

Integrated Infrastructure Development Centres

Pursuant to policy measures for promoting and strengthening clusters of small scale and tiny units, Integrated Infrastructure Development Centres (IIDCs) are being promoted in the areas not covered by the policies.

IT Policy

  • Facilitate single window clearance system
  • Promotion of infrastructure and investment through IT cities and by formulating special package for providing financial assistance to the IT industry, promoting hardware technology parks
  • Manpower development in IT and setting up of a virtual university
  • Setting up of 'Madhya Pradesh Agency for Promotion of Information Technology' to propel the growth of IT

IT policy improves the life of the common man leveraging the strengths of e-governance. Attract Investment in the sector so that the Educated Youth is able to contribute to the development of the State It creates a pool of highly skilled professionals who are at par with the best in the country and transforming MP from a Resource Based Economy to a Knowledge Based Economy.

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Biotechnology Policy

  • A forestation, especially for the quick revival of species, which have shown a tendency to decline.
  • Conservation of the state's biodiversity and the sustainable use of its biotic resources.
  • Enhancement of the productive potential of the aquatic ecosystem.
  • Promotion and cultivation of medicinal and aromatic plants and their processing and value-addition.
  • Improvement of the quality of livestock and poultry especially breeds indigenous to the state.
  • Production of cost-effective drugs that help counter diseases common in the tropical and sub-tropical regions.
  • Production of high-yielding, drought and pest-resistant seeds for agriculture and horticulture crops suited to different agro-climatic zones.
  • Promote environmentally safe technologies for pollution abatement, especially treatment of urban waste and industrial effluents.

Tourism Incentives

A special package of incentives for the tourism industry has been prepared. These incentives will also be available for private entrepreneurs for any of the following activities:

  • Hotels, Motels and Restaurants.
  • Heritage Hotels, Health Farms, Recreation Centres, Ropeways, Golf Courses, Museums, Amusement Parks, Craft Villages, Convention Centres
  • A/c Luxury Coaches, A/c Mini Buses, and imported Limousines purchased by registered tour operators for tourist transport.
  • Activities connected with adventure tourism, such as hang gliding, Para-sailing, river rafting, boating, trekking, rock climbing etc.

The specific incentives are:

Land

Government land will be offered with the approval of the Empowered Committee as equity participation on behalf of the Government at current market value for setting up Joint Ventures.

The companies thus formed who are given any kind of Government land will be expected to complete the project within a period of three years from the date of transfer of land, failing which the land will revert to the Government. The company will not be allowed to transfer the land to anybody else, or use it for any purpose other than that for which it is allotted.

For construction of approved category hotels, etc. in the urban areas, exemption under Section 20 of the Urban Land Ceiling Act will be made available on a case-to-case basis as decided by the Empowered Committee.

Luxury Tax

New projects shall be exempt from Luxury Tax for ten years from the date of commencement of commercial operations.

Sales Tax

New projects shall be exempt from Sales Tax for ten years from the date of commencement of commercial operations.

Entertainment Tax

Entertainment Centres will be exempt from Entertainment Tax for ten years from the date of commencement of commercial operations.

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Doing Business in Madhya Pradesh

Obtaining approvals

An indicative list of approvals with timeframe for setting up business in Madhya Pradesh

Department

Agency

Timelines

Environment/Industries District Trade & Industries Centre / Madhya Pradesh Pollution Board No objection certificate for identified industries: Immediate Approval from Pollution Control Board: Immediate
Industries District Trade & Industries Centre Provisional Registration: Immediate Permanent Registration: 7 days Letter of Intent: Immediate Land Allotment (after necessary scrutiny): Immediate Processing of lease deed: 7 days Issue of Entry Tax/ Sales tax exemption certificate: Immediate Approval of capital subsidy: 30 days Approval of interest subsidy: 7 days
Industries/Electricity District Trade & Industries Centre Approval for electricity connection: Immediate
Industries/ Finance District Trade & Industries Centre Approval of Bank loan: 30 days

Source: PwC research

 

Cost of setting up business

An indicative table on cost of setting up business in Madhya Pradesh

Indicator

Value (in US$)

Industrial land (per sq mt) 4.8 - 28.7
Office space rent(per sq ft per month) 0.48 - 0.96
Residential rent (for a 2,000 sq ft house, per month) 268 - 335
5-star hotel room (per night) 76.6 - 95.7
Electricity (per kWh) 0.086 - 0.124
Water (per 1000 litres) 0.19

Source: PwC research
Note: Exchange rate used is INR 47 per US$.

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More Information on Madhya Pradesh

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