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India By State - Chhattisgarh - Taxation & Legalities




Taxation & Legalities

Policies & Incentives

Industrial Policy, 2004

The state Government aims to, through the industrial policy, increase industrial production and to create employment opportunities. The New Industrial Policy proposes to add maximum value to the state's abundant natural resources. The policy aims to provide necessary infrastructure for investment, reducing the cost of production for the investor and ensuring an investor friendly administration.

Chhattisgarh is committed to a strong industrial growth that is focused on some of the most raw and basic industrial sectors. This would give Chhattisgarh a new height in the industrial map of the country. The industrial policy of the state of Chhattisgarh is targeted to achieve:

  • A rapid response of infrastructure constraints for mining activity by Chhattisgarh Infrastructure Development Corporation
  • Constitution of Chhattisgarh Mining Corporation

The State has economic and political stability. With its emphasis on good governance and good infrastructure, Chhattisgarh is on its way to economic prosperity through industrial investments.

The State has formulated and is implementing stable macro-economic policies, and ensuring transparency and accountability in the administering of rules and regulations. The State Government has enhanced allocations including by way of public- private- partnerships, for providing basic and specialised physical infrastructure, especially in industrial parks. It is also focussing on concerted human resource development.

Mineral Policy

The State Mineral Policy, 2001 envisages the establishment of an investor friendly business environment in the mining sector to attract both domestic and international private sector investors to the State, with the following objectives:

  • To provide facilities for maximum participation of the people in the mineral industries by maintaining transparency to increase revenues from minerals.
  • To develop mineral resources with a priority for export oriented minerals, strategic minerals and base metals
  • To attract private and foreign participation / investment for high value minerals (Gold, Base metals and Diamond) and Energy fuels.
  • To introduce new Technologies, Equipments, and R&D facilities to increase the extraction and improve the quality of the Mineral resources and their utilization
  • Implementation of the Granite Conservation and Development Rules, 1999
  • To formulate measures to check illegal mining and pilferage of mineral revenue
  • To develop a knowledge base and ensure sustainable supply of raw materials for Mineral based industries established within the State through the State Mining Corporation.

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Energy Policy

Chhattisgarh has surplus electricity and thus, has immense possibilities of coal based thermal power generation. The main objective of the State Energy Policy, 2001 is to accelerate the pace of development of the State and to bring it on par with other developed States.

The objectives are:

  • To ensure availability of reliable and cheap electricity to every section of the society, both in rural as well as urban areas
  • To ensure provision of electricity to farmers for agricultural purposes
  • To provide quality power at reasonable rates to industries as per their requirement
  • Power generation through captive power plants for industries
  • To increase power generation capacity by means of renovation, modernisation and innovation (Solar, Biomass, Bio-gas, Hydel, etc.)
  • To ensure power sector reforms, energy conservation and management
  • To enable and ensure consumer satisfaction

Energy Policy

Chhattisgarh has surplus electricity and thus, has immense possibilities of coal based thermal power generation. The main objective of the State Energy Policy, 2001 is to accelerate the pace of development of the State and to bring it on par with other developed States.

The objectives are:

  • To ensure availability of reliable and cheap electricity to every section of the society, both in rural as well as urban areas
  • To ensure provision of electricity to farmers for agricultural purposes
  • To provide quality power at reasonable rates to industries as per their requirement
  • Power generation through captive power plants for industries
  • To increase power generation capacity by means of renovation, modernisation and innovation (Solar, Biomass, Bio-gas, Hydel, etc.)
  • To ensure power sector reforms, energy conservation and management
  • To enable and ensure consumer satisfaction

Tourism Policy

The State has taken a conscious decision to do away with past legacies and to adopt a fresh approach to Tourism Development. The Tourism Policy is focused on creating a unique image for the State and to position it as an attractive destination for both domestic as well as foreign tourists. Some major objectives of this policy are:

  • To promote economically, culturally and ecologically sustainable tourism in the State.
  • Encourage and promote private sector initiatives in developing tourism-related infrastructure.
  • Limit the role of Government to that of facilitator and provider of public goods.
  • Increase the contribution of tourism to the economic development of inter-related sect

IT and ITeS Policy

The IT and ITeS policy introduced to try and create an enabling environment for promoting the growth of the IT industry in the state.

The objectives are:

  • To ensure 100% IT literacy in all schools and colleges in a phased manner
  • To promote local entrepreneurs who are willing to invest in improving the IT infrastructure in the State
  • To increase investments to support the IT industry and create employment opportunities
  • To be a significant contributor in India's IT output by 2020
  • The Chhattisgarh InfoTech and Biotech Promotion Society (CHIPS) have been set up to give impetus to IT growth in the State and implement initiatives for overall socio-economic development.

Incentives

Incentives are directed only at thrust industries, Mega projects and small scale industries. Additional incentives are being provided to industries that employ a large number of women workers, industries that are set up by Scheduled Tribes/Scheduled Castes, and those units investing in quality control and innovation.

  • Thrust sector industries including Export Oriented units will get infrastructure support, to the extent of 25% of infrastructure cost.
  • New units will be exempted from electricity duty for 10 years,
  • Commercial tax would be the floor rate of Value Added Tax, when introduced
  • Mega Projects will be eligible for infrastructure support outside Industrial Estates, up to 25% of the infrastructure cost subject to a maximum of 5 years' sales tax. Such units would be allowed to have captive power plants, to generate power from waste heat recovery, and to wheel power to sister concerns.
  • Units set up in Scheduled Areas will get infrastructure support equal to 10% of the project cost. All industries, irrespective of size, will be exempted from Entry Tax, and payment of stamp duty.
  • For Units having more than 500 workers on permanent pay-roll, if women constitute more than 50% of their work force, an additional incentive equal to 10% of the capital investment over 5 years will be given.

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Doing Business in Chhattisgarh

Prior to setting up business within the State, certain approvals are required from different departments.

Department

Agency

Timelines

Industries / Land revenue District Investment Promotion Committee Land transfer:
Government revenue land -
45 working days from date of application

Through private negotiations
- 30 working days

Any clearances from local government/statutory requirements of state government
- 7 days
Infrastructure - Electricity / Water District Investment Promotion Committee 45 working days or 75 working days from the identification of the site, whichever is earlier
Central Government District Investment Promotion Committee Recommendations to Central Government, if required - 45 working days or 75 working days from the identification of the site, whichever is earlier

Source: PwC research

Cost of setting up business

An indicative table on cost of setting up business in Chhattisgarh

Indicator

Value (in US$)

Industrial land (per sq metre) 4.8 - 33.5
Office space rent (per sq ft per month) 0.48 - 0.957
Residential rent (for a 2,000 sq metre house, per month) 239.4 - 335
5-star hotel room (per night) 57.44 - 95.74
Electricity (per kWh) 0.057 - 0.095
Water (per 1000 litres) 0.19-0.287

Source: PwC research
Note: Exchange rate used is INR 47 per US$

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More Information on Chhattisgarh

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