Govt set to extend 15% tax rate for new manufacturing units until 2025

  • Industry News
  • Jan 23,24
This potential announcement is anticipated in the upcoming Interim Budget on February 1, with the aim of stimulating the manufacturing sector, attracting fresh investments, and simplifying compliance procedures.
Govt set to extend 15% tax rate for new manufacturing units until 2025

Sources indicate that the government is likely to maintain the reduced tax rate of 15% for companies initiating new manufacturing units for an additional year, extending until March 31, 2025. This potential announcement is anticipated in the upcoming Interim Budget on February 1, with the aim of stimulating the manufacturing sector, attracting fresh investments, and simplifying compliance procedures.

India currently provides an attractive 15% tax rate for new manufacturing units, with the prerequisite that operations commence before March 31, 2023. Notably, the establishment of manufacturing facilities by major players like Apple and Foxconn in India has highlighted the benefits of this provision. To further enhance the sector's growth, there is a push to extend the advantage of the lower tax rate.

Given that many global companies are increasingly considering India as an alternative to China, it is deemed logical to introduce these incentives for manufacturing companies. In 2019, the government declared that any new domestic company incorporated on or after October 1, 2019, making fresh investments in the sector, could opt for a 15% income tax rate if they initiated production on or before March 31, 2023. In the Budget presented on February 1, 2023, the government already prolonged the concessional 15% corporate tax rate for new manufacturing units by an additional year, lasting until March 2024.

The industry remains optimistic, hoping for a further extension of the deadline by another year or even three. An industry representative, speaking anonymously, emphasised that the crucial question is not whether the government will extend the deadline but rather the duration of the extension, with a preference for a three-year extension.

Source: New Indian Express

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