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India By State - Meghalaya - Taxation & Legalities

Taxation & Legalities


Policies and Incentives

North East Industrial Investment Promotion Policy (NEIIPP), 2007

The North East Industrial and Investment Promotion Policy (NEIIPP), 2007, was implemented to promote the North East as an attractive investment destination through concessions and incentives.

The policy offers many incentives for potential investors:

  • Industries under this policy are eligible for incentives for a period of 10 years from the date of commencement of production
  • All new units as well as existing units that undergo substantial expansion (a minimum of 25 per cent increase in fixed capital) and start production before 2017 would qualify for state incentives.
  • Along with the NEIPP the North East Industrial Development Finance Corporation (NeDFI) will act as the nodal agency for disbursal of subsidies.
  • 100 per cent excise duty exemption on finished products made in the North East.
  • 100 per cent income tax exemption for industrial units.
  • Capital investment subsidy increased from 15 to 30 percent for plant and machinery up to US$ 360 000 per unit. For units above US$ 360 000 and up to US$7.5 million, an empowered committee approves. For units above US$ 7.5 million, the union cabinet approves.
  • Interest subsidy to be given at the rate of 3 per cent on working capital
  • 100 per cent reimbursement of insurance premium.

Industrial Policy, 1997

The state government introduced the industrial policy to facilitate and sustain industrial development in the state.

The key initiatives of the policy are:

  • To develop general infrastructure such as roads, power, water and communication around the state.
  • The state government to invite private sector in undertaking joint projects.
  • MIDC to act as a channelling agency for obtaining credit for industrial development.
  • DICs to serve as principal contact and guiding agency for entrepreneurs and investors.
  • State government to set up single-window clearance for large and medium industries.
  • Agriculture, horticulture, bio-technology, animal husbandry and meat processing, minerals, electronics and IT have been identified as thrust sectors.

The incentives and Concessions on offer from the policy are:

  • State capital investment subsidy provided at 30 per cent of the fixed capital, with a ceiling of US$ 43 000.
  • Interest subsidy for bank loans at the rate of 4 per cent, with a ceiling of US$ 435 per month for a period of three years.
  • Subsidy on power tariffs at the rate of 30 per cent and 25 per cent for loads up to 2 MW and above 2 MW, respectively.
  • Cost of drawl power-line above 33 kV is reimbursed if a separate line is required for the industry.
  • Exemption from sales tax for a period of seven years from the date of commercial production.
  • Refund of central sales tax paid on machinery and equipment up to the commissioning of the industry.
  • Subsidy on cost incurred on quality control measures and pollution control measures.
  • Exemption from stamp duty
  • Additional sales tax incentives, limited to the amount of capacity subsidy.
  • Additional 5 per cent capital investment subsidy for export oriented units.

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The Meghalaya State Tourism Policy, 2007

The tourism policy was introduced to promote tourism as an economic driver for the state. The government has identified key thrust areas:

  • Nature tourism, adventure and sports tourism, cultural tourism, health tourism, golf tourism, convention tourism and arts and crafts tourism.
  • Public private partnership (PPP) mode to be given preference for infrastructure development and service delivery.
  • Training centres to be set up by the government to provide training in hospitality and tourism industry.
  • Single-window clearance to be set up in cognizance with the NEIPP 2007.

Key incentives on offer through the tourism policy are:

  • Reimbursement of up to 30 per cent of realistic wage of local tribunal employees, annually.
  • Subsidy at the rate of 50 per cent for purchase and installation of power generation set, above 2 MW.
  • 100 per cent refund of central sales tax (CST) on equipment and machinery installed as on the date of commissioning of the unit.
  • Stamp duty exemption up to 75 per cent on investments above US$434,782.
  • Reimbursement of 25 per cent of the entertainment tax for theme parks and urban entertainment centres for a period of five years.
  • Exemption from luxury tax for a period of five years.
  • Reimbursement of 25 per cent of the value added tax (VAT) for five years from the commencement of operation.

IT policy, 2004

The state government has seen IT industry as an opportunity to create wealth, generate employment, and bring in IT-led economic growth. The IT policy was introduced with key initiatives set out as being to:

  • Facilitate creation of IT infrastructure, software technology park and lat mile connectivity to villages.
  • Facilitate the establishment of IT enabled service centres in the state.
  • To develop the human resource base required for the IT industry.
  • To apply IT in governance and management of the state government programmes.
  • Earmark up to 5 per cent of the government's budget for IT-related expenditure.
  • The incentives and concessions on offer are:
  • Over and above the state incentives for industrial unit, 10 per cent subsidy to be provided for IT industries in respect of power captive generation set, capital subsidy and capital rent subsidy.

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Doing business in Meghalaya

Meghalaya is currently undergoing rapid development to try and bring it on par with the rest of the country. There are many advantages to doing business in the state. There is excellent institutional support through various central and state government agencies, such as North East Council, Ministry of development of north eastern region and Meghalaya industrial development corporation.

There are many industrial incentives on offer in the state, other than those from central government incentives meant for investments in the Northeast region. Extra help and incentives have been identified for thrust industries, these industries include: agro-processing, horticulture, minerals, tourism, electronics and IT.

The rich abundance of natural resources in terms of flora, fauna, medicinal plants, forests, limestone, feldspar, quartz, sillimanite, granite, industrial clay and uranium and the favourable agro-climatic conditions offer significant avenues for investment. With literacy rate of 62.6 per cent and a strong higher-education infrastructure Meghalaya offers a large availability of skilled workers, majority of which understand and speaks English.

Potential investors can feed off the rich culture evident in the Meghalayan community and the ever growing tourism industry.

The lists of approvals required for businesses to start up in the state are:

Lists of approvals required for businesses

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More Information on Meghalaya

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