between the centre and states in the 5842 percent ratio the 42 percent exemption granted by the state was to boost local development of the area and attract ancillary units to mushroom around the mother plant as well as skill the local manpower in other words uplift the entire region the gst council has now designated the department of industrial policy and promotion under the ministry of commerce and industry to work out the devolution formula to pass on the benefits of the centres earlier 58 percent tax exemption that will continue under gst a sizeable number of pharma automotive and packaging goods units have found a home in these states and are clustered here hence part of their profitability is likely to take a hit if the devolution formula is not followed in toto claims and refunds these industries have made huge investments with the exemption built into their pricing or in cost of production of the products now the question is the gst cannot break the tax chain so stakeholders will have to first pay the tax and then claim refund of the 58 percent of the tax levied if the balance 42 percent exemption from the state does not come the viability of these units will become very difficult working capital requirements will also rise as units have to pay the tax first and then claim refund from the government confirms kher also read gst registration closes on july 30 nipman fastener industries has completed 7 years in haridwar and is also awaiting more clarity through a government notification on the quantum of gst that its customers would be refunded so how commercially viable and attractive to investors will these distant regions now be post imposition of gst a few positives going in their favour are that land costs are cheaper as are project costs here an added benefit is of being in close proximity to the oe customer as well as geopolitical spinoffs of being located at a faroff place with most of the companies having completed 78 years of their stay here and only 23 years remaining for the tax free regime to end the area has now become wellconnected with rail road and air in addition there is now skilled manpower to man the factories so exiting the region midway may not be a favourable option for existing players but new entrants may think twice about dropping anchor here unless states woe them with additional subsidies from their own piggy banks by shobha mathur etauto published on jul 17 2017 at 1101 am ist telegram facebook copy link be the first one to comment comment now comments comment now read comment 1 all comments post post find this comment offensive choose your reason below and click on the submit button this will alert our moderators to take actions reasons for reporting foul language defamatory inciting hatred against a certain community out of context spam others report join the community of 2m industry