NEW DELHI: Faced with slow uptake in private investment, the government may announce some tax sops in the Budget this year for encouraging new investments by companies. As per sources, the discussion is around extending concessional tax rate to brown field projects undertaken by existing companies.
The government had earlier announced concessional tax rate of 15% to new domestic manufacturing companies. The offer was for companies which were set up and registered on or after October 1, 2019. The scheme was available till March 31, 2024.
“The last time it was restrictive -- only new companies were allowed (to avail concessional rates). This time there’s been demand that even existing companies, who are making new investments, should be taxed at a concessional rate,” said a source, who was part of discussions with the finance ministry during pre-budget consultation. He said a representation has been made in favour of tax benefits for brownfield investments.
Ministry sources confirmed that such discussions have taken place, but no final call has been taken yet. The demand for extension of concessional tax rate of 15% to newly-formed manufacturing companies by one more year was not heard by the government.
With private investments not picking up, Indian Inc and economists have demanded tax sops to encourage investments. Private investments have failed to pick up despite government efforts. The first advance estimate of FY25 GDP shows growth in gross fixed capital formation, which measures investments in economy, has shrunk to 6.4% from 9% a year ago.