The government of West Bengal has recently brought into force the Information and Communication Technology Incentive Scheme 2012 (“ICT Scheme”), for providing various incentives to the Information Technology (“IT”) sector. The ICT Scheme is issued with a sunset clause of five years and is made applicable from 1 August 2012 to all IT units looking to newly establish or expand its unit on large, medium, small and micro scale (“IT Units”). These IT Units may be in private sector, cooperative sector, joint sector and can also be companies managed and owned by the state government. The ICT Scheme replaces the IT Incentive Scheme, 2009. However, any benefit extended under the IT Incentive Scheme, 2009 will continue till the stipulated period.
The West Bengal Scheme of Assistance to IT and ITeS for Human Resource Development, 2008 which was to expire on 31March 2013, is also incorporated under the ICT Scheme and is made operative till 31 July 2017.
For the purpose of determining the type and the quantum of incentive that can be availed under the scheme, the state of West Bengal is classified into categories A, B, C and D. These four categories (A, B C and D) are based on the remoteness of the project, where A indicates most accessible and D indicates most remote area. Under the scheme the incentives go up as one ventures into the more remote areas, therefore, the IT Units looking to set up or expand in category “D” area will get the maximum benefit.
The ICT Schemes offers various incentives to the IT Units. The bouquet of incentives offered under the ICT Scheme include capital investment subsidy, interest subsidy, employment generation subsidy, subsidy for quality improvement and patents, incentives for approved expansion project of an existing unit, mega projects and Central Sales Tax refund.
- Capital Investment subsidy: The IT Software units eligible under the ICT Scheme located in category A & B are granted a subsidy of 10 percent of the fixed capital investment subject to a ceiling of INR 250 lakh, those located in category C are granted subsidy of 12 percent subject to a ceiling of INR 350 lakh and units located in category D are granted subsidy of 15 percent without any ceiling rate. The eligible IT hardware unit located in category A, B and C area are granted subsidy of 12 percent and those located in category D are granted a subsidy of 15 percent subject to a ceiling of INR 450 lakh.
- Interest Subsidy/ Training Subsidy: The eligible IT Units are entitled to interest subsidy on the annual interest liability on the term loan borrowed from a financial institute and are also entitled to a training subsidy for providing training to fresh employees for such approved IT Units. IT Units falling under the category A, B, C and D will be provided a subsidy of 25% of the annual liability on the term as interest subsidy. As training subsidy the entitled IT Units will be granted INR 20,000 or one months’ salary whichever is lower. This training subsidy will be provided for maximum 750 candidates of IT Units located in category A and B for a period of five years and for maximum 1000 candidates of IT Units located in category C and D which will be provided for a period of seven years.
- Refund of Stamp Duty and Registration Fee: All the IT Units eligible under the ICT Scheme will be entitled to refund the stamp duty and registration fee required for the purpose of registration of documents within the state relating to purchase / acquisition of land and building for setting up of the approved IT unit. This will be applicable to all IT Units set up on or after 1 August 2012 irrespective of the location.
- Waiver of Electricity Duty: An eligible IT Unit or ITeS unit will be entitled to waive off the duty payable on the electricity consumed for its production/operation activity for a period of 5 years for IT Units located in category A & B and 7 years in in case the IT Units are located in category C&D from the date of commercial production/operation.
- Subsidy for Quality Improvement and Patent: The IT Units of micro, small and medium size will be entitled to reimburse 50% of the expenditure incurred for obtaining ISI certification and for filling patents. This is subject to ceiling of INR 5 lakh per year.
- CTC Refund Scheme: The eligible IT Units located in category A, B C and D will be entitled to refund the Central Sales Tax paid by such IT Units for a period of 5 years.
- Entrepreneurship Assistance: Entrepreneurship Assistance for start-ups of small, medium and micro IT software units is provided under the ICT Scheme. These units are entitled to reimburse 25% of the lease rental, 25% of the power bill and reimbursement of INR 2. 5 lakhs on the money spent on recruitment process. The IT Units are also entitled to reimburse 50% of the rental cost for participation in the notified exhibitions. All these incentives will be provided as per the terms of the ICT Scheme.
- Mega Projects: Under the ICT Scheme the state may provide special package of incentives to a mega projects on case to case basis. This incentive will be provided on the basis of the pioneering nature of project, location aspect, introduction of state of the art technology, scope of further related investment and other such aspects.
- Animation and Gaming industry: The animation and the gaming industry are granted incentives like investment subsidy of 12% upto a limit of Rs 3.5 crore payable in five equal yearly instalments for IT Units located in category A & B areas, subsidy of 15% up to a limit of Rs 4.5 crore payable in five equal yearly instalment for units located in category C & D areas. These incentives will be provided only if these IT companies in the animation and gaming industry sponsor economically or physically challenged candidates to a certified diploma course and thereafter, absorb them for a minimum period of 1 year after the course is completed.
The IT unit claiming benefit under the ICT Scheme shall make an application to the managing director of West Bengal Electronics Industry Development Corporation. On conducting an enquiry about the IT Unit and on being satisfied that the application is in terms with the provision of the ICT Scheme, an eligibility certificate will be issued to such IT Unit. Once an IT Unit receives the eligibility certificate it will be entitled to apply for the incentives in the manner specified under the ICT Scheme.