Relief in Tax for Faster Development of Food Processing Sector

Rajya Sabha

The Government has taken necessary measures for providing relief and achieving simplification in tax rates to ensure faster development in food processing industries.

Giving this information today in Rajya Sabha to a written question Shri Subodh Kant Sahai, Minister of Food Processing Industries informed that 100 percent tax exemption for first five assessment years beginning with the initial assessment year is available under section 8-1B (11A) of Income Tax Act,1961 to undertakings deriving profit from the business of processing, preserving and packaging of fruits or vegetables and new units in the business of processing, preservation and packaging of meat or meat products or poultry or marine or dairy products. Under sub-section (11A) of section 80-1B of the Income Tax Act,1961 a deduction from profits upto specified amounts is allowed in the case of an undertaking deriving profit from the business of handling, storage and transportation of food grains subject to specified conditions, if such undertaking begins to operate such business on or after the 1st day of April, 2001. With a view to preserve perishable food items like milk, poultry and meat, the Finance (No.2) Act 2009 has amended sub-section (11A) of section 80-1B with effect from 01.04.2010 to also provide tax holiday in respect of the business of processing, preserving and packaging of meat and meat products and poultry, marine and dairy products for units which begin to operate such business on or after 1st April,2009. The amount of deduction in case of an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or meat and meat products or poultry or marine or dairy products or from the integrated business of handling, storage and transportation of food grains, is hundred per cent of the profits and gains derived from such undertaking for five assessment years beginning with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains derived from the total period of deduction does not exceed ten consecutive assessment years and subject to fulfillment of the condition that it begins to operate such business on or after the 1st day of April, 2001. The Finance (No.2) Bill 2009 proposes to also extend investment linked tax incentive by way of insertion of a new section -35AD in the Income Tax Act 1961 to the business of setting up and operating cold chain facilities for specified products and to the business of setting up and operating warehousing facilities for storage of agricultural produce.

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