Business Subsidy Types
Being a Businessman, before going to start Business Subsidy Planning you need to understand the basic concept of Types of Subsidies.
For your better understanding, we can classify the subsidy for business plan in following ways:
Linked Based Subsidy:
Subsidies which are linked with Bank Loan are known as Credit Linked Business Subsidy. In simple meaning, you need to take Bank Loan for availing the benefits of this type of Subsidy. For Example, Capital Subsidies under NABARD/PMEGP Scheme/CLCSS etc. are the Credit Linked Subsidy. Without Bank Loan, you cannot take the benefits of these subsidies.
Interest Subsidy is also the example of Linked Base Subsidy.
Further there are some other subsidies benefits are provided the govt. which are not connected with Bank Loan, known as Not Credit Linked Subsidy.
For Example, Stamp Duty Refund, Refund of CLU Fee, Electric Duty Exemption etc.
Sponsored Base Subsidy:
We can classify sponsored base subsidy in two ways i.e.
- Subsidy Schemes Sponsored by Central Govt.
For Example, Agriculture Infrastructure Fund (AIF) Scheme is sponsored by the Department of Agriculture and Farmer Welfare of Govt. of India.
- Subsidy Schemes Sponsored by the State Govt.
For Example, Stamp Duty Refund is a State Govt. Scheme under which State Govt. has made the refund of Stamp Duty paid by the Businessman on purchasing of Land for business purpose.
Payment Base
As on payment basis, we can classify the Fiscal Incentives is two ways i.e.
- Grant: Under Grant Govt. approved the project and make the payment of Grant Amount for pursuing the Construction of Project to the beneficiaries. For Example, Ministry of Food Processing has given the Grant for set up Cold Chain Project.
- Subsidy: Under Subsidy, Beneficiary First need to make investment in his project and Govt. will provide the financial assistance after commencement of Project. For Example, MSME Department has given the Subsidy under CLCSS Schemes after Commencement of the Project.
Time Base Subsidy
As per time base classification, we can classify the subsidy as:
- One Time Subsidy:
The Subsidy which receives only one time such as Capital Subsidy on Plant and Machinery, Stamp Duty Refund, EDC Refund etc. can be classified as One Time Subsidy.
- Regular Subsidy:
There are some subsidies which can be claimed by a business unit as on year basis (Generally 5 to 10 Years) as per eligibility norms. For Example, Interest Subsidy, SGST Refund, Electric Duty Exemption, Employment Generation Subsidy etc.
Industry Base Subsidy
We can also understand the subsidy as per industry specific such as:
- Subsidy for Agri-Based Business
- Subsidy for MSME Units
- Subsidy for Food Processing Units
- Subsidy for Textile Sector etc.
So, classification of subsidies or Type of Subsidy gives us a better understanding the subsidy subject. Many time we observe that Businessmen are remaining confused about subsidy and make a percept that they can avail only one type of business subsidy. Hopefully now you have removed this wrong myth.
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For, more information on this you are requested to contact our KIP subsidy helpline on Mail – sales@kipfinancial.com and contact Number- +918683898080
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