Fiscal Incentives

Goods and Services Tax (GST)

  • 60% of food products are in 0% & 5% slab.

  • Nil GST on milk, milk products (like Butter milk, Curd, un-branded Paneer), Meat, Fish, vegetables, nuts and fruits. However, the condensed milk is taxed at 12% GST and UHT Milk is taxed at 5% GST.

  • Services of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables which do not change or alter the essential characteristics of fruits & vegetables attract NIL GST.

  • 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 attract 18% GST.

  • Machinery used in dairy sector attract 12% GST.

  • Machinery for the preparation of meat, poultry, fruits, nuts or vegetables and on presses, crushers and similar machinery used in the manufacture of wine, cider, fruit juices or similar beverages attract 18% GST.

  • Aerated water including mineral waters, containing added sugar or other sweetening matter or flavoured, Molasses & Pan Masala attract 28% GST.

Income Tax Incentives

  • 100% exemption to food processing units on profit for the first 5 years and 25 percent (30 percent in case of companies) for next 5 years.

  • 100% deduction permitted on capital expenditure for cold chain or warehouse.

Credit Facilities

  • Loans to food & agro-based processing units and Cold Chain have been classified under Agriculture activities for Priority Sector Lending (PSL)

  • Capital investment in the creation of modern storage capacity has been made eligible for Viability Gap Funding scheme of the Finance Ministry. Cold chain and post-harvest storage have been recognized as an infrastructure sub-sector.

  • A special food processing Fund of USD 263 Million (Rs. 2,000 Cr) in NABARD for providing affordable credit to Mega Food Parks and units to be set up under MFPs & designated food parks.

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