Information Technology ( IT ) Industry
Incentive Scheme (1999-2004)
Preamble
The Information Technology (IT) Policy of the state has acknowledged the potential of IT in transforming the society. The IT policy also emphasises the need to accelerate development of IT industry in the state of Gujarat. This in turn will help proliferate IT culture in the state and create large-scale employment opportunities.
During the last few years, IT has been the fastest growing segment of the economy. This sector has created enormous potential for export and growth. To give an impetus to this industry, it is imperative that, the incentive policy takes into account the typical characteristics of this industry. Since, in IT industry, the investment in intangible assets tends to exceed tangible assets. The evolution of IT incentive policy has taken into account this factor as well.
TITLE
This scheme shall be known as Information Technology Industry - Incentive Scheme 1999-2004, hereinafter referred to as scheme.
Operative Period
This scheme shall become operative with effect from 01-04-99 and shall remain in force for a period of 5 years, from that date. However, a review of this scheme will be undertaken after two years, and based on the experience of State Government and the need of this sector, amendments to the scheme, if necessary, will be made.
Area Of Operation
It would be operative anywhere in the state of Gujarat.
Definition
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"IT Software" means any representation of instruction, data, sound, image including source code, object code recorded in a machine, readable form and capable of being manipulated or providing interactivity to use by means of automatic data processing machine falling under head "IT Products"
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"IT Service" is defined as any service which results from the use of any IT software over a system of IT products for realizing value addition.
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"IT Products" would include computer, digital-data communication and digital data broadcasting products as notified by the Ministry of Finance, Government of India or Central Board of Excise & Customs.
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"IT Industry" would include development, production and services related to IT products, IT Software and IT service. Appendix-I gives the list of IT industry heads.
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The "Eligible New Information Technology Unit" means a new unit in IT industry set up after the cut-off date. It should also fulfil the following Criteria.
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The new project should have obtained SSI registration from concerned District Industries Center or obtained the Letter of Intent, Letter of Approval or obtained receipt against filling of Industrial Entrepreneur Memorandum.
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The new project should have a separate identifiable capital investment means that, it should not have any linkage with an existing manufacturing/IT Industry unit.
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Eligible IT Unit
It is an existing IT Unit which registers itself as an IT Industry after the cut - off date. Such an unit should have commenced production before the cut - off date.
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Indian half Circuit- satellite communication link between two earth station via satellite (International segment) is divided into two parts, i.e. one earth station to satellite and the second part is Satellite to other Earth station. The segment between the Indian earth station up to satellite is "Indian half Circuit" and satellite to other earth station overseas, anywhere in the world is the Second Half Circuit.
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Eligible Total Capital Investment
It includes:
1. Investment made in the land. The actual cost of the land including the legal charges incurred for acquisition of land needed for the project. A plot of land acquired under lease agreement except from GIDC Estate / Infocity on rental basis will not be considered as Fixed Capital investment.
2. New building
New building means building required for project including administrative building. The investment made in creating canteen, in-house training building for the staff of respective unit. The cost incurred on purchase of old building or repairing cost will not be made eligible for consideration as fixed capital investment. Residential accommodation for the employees of the unit, either constructed or bought would also be eligible. Old residential building will not be eligible.
3. Machinery
This includes plant & Machinery needed to set up 'Eligible New IT Unit'. This would also include 'IT Product' and 'IT Software'. IT Product and IT Software installed at the residence of the employees of the eligible new unit will also qualify subject to the limit of 5% of the Eligible total Capital investment. The cost of electrification, transportation, erection, installation will be capitalized under the head - plant and machinery. The investment made in acquiring air-conditioning plant/machine will also be eligible. Transport facilities like bus/buses for the conveyance of the workers from the surrounding villages/towns to the factory and back. Diesel generating sets of the capacity limited to the connected load. Plant for non-conventional source of energy. Cost of material handling equipment. Plant for purification or de-salination of water. Plant for pollution control measures. Testing facilities. The investment made in related furniture will be allowed up to 10% of eligible fixed capital investment.
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Assets Acquired
The eligible fixed assets acquired and brought up to twelve months from the date of commencement of commercial production will be eligible as "Eligible Total capital investment". No assets acquired, created and/or bought after the operative period of the scheme shall be considered eligible. Assets acquired under DGP scheme/under hire purchase scheme or installment system/lease scheme would be considered eligible, exclusive of cost of interest.
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Ineligible Investment:- The following investment shall not be considered eligible for any incentives.
1 Working Capital
2 Commissioning fee
3 Goodwill fees
4 Royalty
5 Preliminary and Pre-operative expenses.
6 Second-hand equipments purchased or reinstalled/shifted
7 Capitalised Interest
8 Any other investment which is not expressly narrated as eligible.
9 Technical know-how fee.
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Eligible Turnover
This is the turnover from "IT Product", "IT Software". It would be calculated on the basis of accounts submitted to the concerned Income tax authorities. Explanation: Turnover from "IT Services" undertaken by the company will not qualify for consideration under the eligible turnover.
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Eligible Incremental Turnover
This is the difference between the eligible turnover of the current year and the eligible turnover of the previous year.
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Cut-off Date: 01-04-1999.