New Delhi, Aug 19 (IANS): A day after a Rs.1.25 lakh crore financial package was announced for poll-bound Bihar, the Finance Ministry on Wednesday declared tax incentives for five years to set up manufacturing facilities in 21 notified backward districts -- including capital Patna -- of the state.

Prime Minister Narendra Modi, addressing a rally at Arrah in Bihar on Tuesday, announced an economic package of Rs.1.25 lakh crore in a measure taken to woo voters in the state which is headed for assembly polls later this year.

The tax benefit will be available during the five-year period from April 1, 2015 to March 31, 2020, according to an official release issued here by the Finance Ministry.

Besides Patna, the other districts are Nalanda, Bhojpur, Rohtas, Kaimur, Gaya, Jehanabad, Aurangabad, Nawada, Vaishali, Sheohar, Samastipur, Darbhanga, Madhubani, Purnea, Katihar, Araria, Jamui, Lakhisarai, Supaul and Muzaffarpur.

During the period, the manufacturing units established in such areas will enjoy 15 percent additional depreciation and 15 percent investment allowance under the Income Tax Act on the total cost incurred.

The aforesaid incentives are in addition to other tax benefits available under the Income-tax Act, the release said.

"...Thus a manufacturing undertaking/enterprise set up in any of these areas during the aforesaid period will be eligible for 35 percent (instead of 20 percent) of additional depreciation.

"This would be over and above the normal depreciation of 15 percent," it said.

Besides, a company engaged in manufacturing will also be eligible for 30 percent (instead of 15 percent) of investment allowance if its investment in new plant and machinery during the period April 1, 2015 to March 31, 2017 exceeds Rs.25 crore.