Ahmadabad: In a move that will help the state draw more investments, Gujarat government has reworked its policies to offer tax incentives to businesses. According to a recent directive, various tax incentive schemes will now be offered in the form of state goods and services tax (SGST).

This will replace value added tax (VAT) incentives and concessions that were earlier available under the state’s industrial policies before GST, considered the biggest reform in India’s indirect tax structure since the economy was opened up 25 years ago, was implemented.

“After Telangana and Uttar Pradesh, Gujarat has become the third state that has come up with a policy to offer SGST incentives after GST implementation replaced VAT and excise duty," said a senior state government official on conditions of anonymity.

As per a notification dated 3 October, the state government has decided to amend its Gujarat Industrial Policy 2015 and replace various tax incentive schemes with respect to VAT with SGST effective from 1 July.

Mint has reviewed a copy of the notification.

The Gujarat Industrial Policy- 2015, aimed at promoting Gujarat as a globally competitive industrial destination, framed various schemes to extend support in the form of tax concessions or cash subsidy. The policy which supports to give assistance to start-ups and industries, also aims to promote aerospace and defence and for this, it had rolled out Defence Manufacturing Policy Incentive Scheme in 2016.

“On introduction of the GST act, the VAT Act does not remain in operations with effect from 1 July 2017. The state government reviewed the impact of the changed structure and decided to continue the support to the investment and decided to amend the provision of VAT concession and allow the SGST concessions," according to the new amended policy notification.

The policy, however, is yet to announce the quantum of SGST benefits. The notification says that the modalities will be decided later and a committee for the same will be formed.

The government has also amended the Gujarat Textile Policy—2012 by replacing VAT concessions by SGST. The state government came out with a separate notification on 3 October to this effect.

The Gujarat Textile Policy—2012 is aimed to create an integrated approach to strengthen the ‘farm-fibre-fabric-fashion to foreign’ value chain under Gujarat industrial policy—2009.

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