New Delhi, Jan 30 (KNN)  To establish and enhance food processing industries in the country the government provides various tax and other incentives to businesses.
The details of tax incentives provided by the Government are as follows:

1.  Income Tax:
 
Deduction of expenditure: These incentives are allowed for the following businesses for the investment made in the previous year and prior to commencement of its operations:
 
i)    Businesses allowed 100 per cent deduction:
 
(a)   Setting up and operating a cold chain facility.
(b)   Setting up and operating warehousing facility for storage of agricultural produce.
 
ii)   Businesses allowed 150 per cent deduction (provided the taxpayer has commenced its business on or after 01.04.2012):
 
(a)   Bee-keeping and production of honey and beeswax.
(b)   Setting up and operating a warehousing facility for storage of sugar.
 
2. Deduction of Tax from profit: This tax incentive is available at the rate of 100 per cent tax exemption for the first 5 years of operations. After 5 years, it is at the rate of 25 per cent of the profits. However, in case of a company, rate of tax is 30 per cent of profits, after 5 years of operations. This benefit is available only for ten years provided that such business had commenced with effect from 01.04.2001. This incentive is provided for new units in the business of processing, preservation and packaging of fruits or vegetables, meat and meat Products, poultry, marine or dairy products. However, in case of business relating to meat, meat products, poultry, marine products or dairy products, the above incentive is available to only those units who have started their production after 01.04.2009.
 
3. Service Tax:
 
i) Negative list: Service tax is not leviable on items contained in the negative list. These are services including processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market.
 
ii)  Exempted category: Exemption from Service Tax is allowed for following services:
 
a)   Construction, Erection, Commissioning or installation of original works pertaining to post-harvest storage infrastructure for agricultural produce including Cold storages            for such purposes.
b)   Mechanized Food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages; and
c)   Services provided by a goods transport agency by way of transportation of fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage.
d)   Services of Loading, unloading, packing, storage or warehousing of agricultural produce.
 
4. Customs Duty:
 
i)  Government has provided following Project Import benefits:
 
a.  Projects for the installation of mechanized food grain handling systems and pallet racking systems in ‘Mandis’ and Warehouses for food grains and sugar;
b.  Cold storage, cold room (including for farm level pre-cooling) or industrial projects for preservation, storage or processing of agricultural, apiary, horticultural, dairy, poultry,       aquatic and marine produce and meat.
 
Consequently, all goods related to Food Processing, imported as part of the project, irrespective of their tariff classification, would be entitled to uniform assessment at concessional customs duty of 5 per cent plus CVD as applicable. 
 
ii)  Customs duty on Hazelnuts has been reduced from 30 per cent to 10 per cent. 
 
iii) Customs Duty on De-hulled Oat grains has been reduced from 30 per cent to 15 per cent.
 
5  Central Excise Duty:
 
In order to promote food processing industry, the Government has given following concessions in Central Excise Duty from time to time:
 
i) Food Products:
 
a)  Nil excise duty in milk, milk products, vegetables, nuts and fruits, fresh and dried.  
b)  As against standard excise duty of 12 per cent, Processed Fruits and Vegetables carries a merit rate of 2 per cent without CENVAT or 6 per cent with CENVAT.
c)  Soya Milk Drinks, Flavoured Milk of Animal origin also carry a duty of 2 per cent without CENVAT or 6 per cent with CENVAT.
d)  Excise duty on “Tapioca Starch manufactured and captively consumed within the factory of their production, in the manufacture of Tapioca Sago (Sabudana)” and excise             duty on Tapioca Sago (Sabudana) has been reduced to nil in the Budget 2013-14. 
 
ii) Food Processing Machineries:
 
a)  All Refrigeration Machineries and parts used for installation of Cold storage, Cold room or Refrigerated Vehicle, for the preservation, storage , transport or processing of           agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat are exempted from Excise Duty.
b)  Pasteuring, drying, evaporating, etc. machinery used in Dairy sector is exempted from Excise Duty.   (KNN/PIB)