Businesses rehabilitated in Nav Dharavi to get SGST refund for 5 years

DRPPL announces tax benefits for industrial units in redeveloped Dharavi to boost local businesses, including a refund of SGST after obtaining the occupation certificate.

Mumbai: Dharavi Redevelopment Project Pvt Ltd (DRPPL) on Monday said that eligible industrial and commercial units in redeveloped Dharavi will enjoy benefits, such as a refund of State Goods and Services Tax (SGST), to boost local businesses. The project is a joint venture between the Government of Maharashtra and the Adani Group.

Passing pedestrians and traffic are seen through the window of a leather goods stores in the Dharavi area of Mumbai, India, on Tuesday, July 18, 2017. India's new goods and services tax, introduced on July 1, classified leather products as luxury items and raised the rate to 28 percent -- more than double the 13.5 percent tax levied until June 30. The leather sector is just one example of how India's vast informal economy -- which accounts for more than 90 percent of the workforce -- is struggling under India's new tax rates, which range widely from exemptions for items like basic food grains to 28 percent for products like air conditioners. Photographer: Dhiraj Singh/Bloomberg (Bloomberg)

The tax rebate will come into effect after the newly constructed buildings receive the occupation certificate (OC). This is as per the tender conditions. “Redevelopment will transform the informal nature of businesses in Dharavi and enable them to be a part of the India growth story. To support this transition, the state government has offered tax benefits, like the reimbursement of SGST. This will provide existing and new businesses in Dharavi a robust footing and boost their profitability. It will make the businesses more competitive and give them manifold growth opportunities,” said a DRPPL spokesperson.

As per the tender conditions, SGST for industrial and commercial units will be reimbursed by the state government’s finance department through the DRP/SRA for five years from the date of issuance of the OC.

Raju Khade, who runs Rank leather unit near Kala Killa area in Dharavi, welcomed the concession in SGST. “We welcome the concession given to businesses, but it will happen only after the rehabilitation is complete and OC is obtained. The picture is not yet clear whether our unit will remain here or in the Nav Dharavi being planned on salt plan land in Bhandup-Mulund,” said Khade, who works out of a small rented premise and manufactures all kinds of leather and non-leather goods including bags, wallets, belts etc.

“So, we do the cutting here and outsource the work to skilled workers around our units. Bags, wallets, belts each require different skilled workers,” he said, adding, “Moving out of Dharavi to Bhandup-Mulund will not cause a problem as long as the allied businesses are available around us.”

Dharavi encompasses several thousand industrial and commercial units manufacturing garment and leather items. Many are vendors for large national and international brands sold across the world, with turnover estimated to be in millions of dollars.

DRPPL, the special purpose vehicle formed to execute the project which has Dharavi Rehabilitation Project CEO SVR Srinivasan as its chairman, proposes to transform Dharavi by providing facilities for better education, health care, vocational training. The project will provide community halls, recreational areas, public gardens, dispensaries and day care centres for children.

“The aim is to not only redevelop Dharavi into a better space but also to ensure a quality lifestyle for residents while maintaining the integrity of its diversity. This transformational project will bring in a major shift that will help set an extraordinary example for similar redevelopment initiatives in any part of the world,” a DRPPL spokesperson said.