J&K MSMEs Seek PM's attention Over Denial of Gross GST Incentives

Federation of Industries Jammu has sought intervention from PM Modi, HM Amit Shah and LG Manoj Sinha to save small industries from closure due to denial of Gross GST reimbursement for existing and expanding units.

Swati Dayal
28 Apr 2023 | Updated On 29 Apr 2023
J&K MSMEs Seek PM's attention Over Denial of Gross GST Incentives

The small industries in Jammu have been denied reimbursement of Gross Good & Services Tax (GST) to the existing units and the units under Substantial Expansion through a notification. In this regard, they have sought intervention of Prime Minister Narendra Modi, Home Minister Amit Shah and Lt Governor of Jammu & Kashmir Manoj Sinha.

The Federation of Industries Jammu in the Union Territory of J&K has urged the government to save the existing micro and small entrepreneurs (MSEs) of JK UT from closure.

MSMEs and Service Sector Feel Ignored

FOIJ said, “…the Existing MSME Sector and Service Sector has totally been ignored while granting the GST Link Fiscal Incentives as per Notification No. F/1(1)2020-SSS dated 19-02-2021 issued by DPIIT, Ministry of Industry & Commerce”.

While highlighting the issue, Mr Lalit Mahajan, Chairman, FOIJ said, “Due to this Notification unhealthy competition might erupt between the existing and new industries in the Union Territory as the new investors in the State who will get the benefits of Gross GST Reimbursement of 300% in the Investment of Plant & Machinery.”

Denial of GST Incentive Making Existing Unit Un-competitive

Talking to TICE News, Lalit Mahajan said, “The existing units in J&K are not getting this incentive now after 2021. Earlier they used to get. But the new units are getting it. This is creating an unhealthy competition in the industries and making the existing units less competitive as compared to the new ones.

Mahajan said that the old units are getting the incentives only on value addition and the new ones are getting the reimbursement of Gross GST. The units which are going for substantial expansion are also not getting anything. 

Gross GST is being given on 300 per cent of the investment on plant and machinery in 10 years. The old units are not getting anything. We have already written to the state government, central government and DIPP. But nothing has been done in this regard,” Mahajan added.

Substantial Expansion, 25% of investment in plant and machinery used to get benefit under substantial expansion when they used to invest in additional machineries, FOIJ Chairman added.

FOIJ highlighted that a majority of MSME units are working in J&K UT with limited Marketing Avenues and Higher Production Cost. 

The industry federation acknowledged that “the Central and the State Government always provided Fiscal Incentives from time to time in all the previous Notifications of Government of India/ State Government issued since 2002 to Existing Units as well as to Units under Substantial Expansion at par with the new units.”

FOIJ added that, “Under the State Industrial Policy 2021, the SGST Reimbursement Incentive was given on Value Addition only to Existing Units for the Reimbursement of SGST but the Existing Units under Substantial Expansion have been totally ignored for the grant of GST Link Incentives by State/Central Government.” 

Existing Units Employ 4-5 lakh local people of J&K

This, the apex industry body said had resulted in great resentment amongst the existing unit holders who are providing direct and indirect employment to 4-5 lakh local people of J&K UT.

“We fear that the working existing industrial units may opt for the closure of their Units in future due to non-availability of Central Government incentives. Not giving GST Linked Incentive to existing units as well as units under Substantial Expansion at par with the new units under the Industrial Development Package 2021 may result into mass scale retrenchment of local industrial workers," FOIJ said.