Lower tax for new manufacturing unit may continue in FY25
NEW DELHI: The government is expected to continue the lower tax rate of 15% for the companies starting new manufacturing units for another year until March 31, 2025, according to sources.
This may be announced in the upcoming Interim Budget on February 1. The motive is to boost the manufacturing sector by bringing in fresh investment and ease of compliance.
“India offers a tempting tax rate of 15% for new manufacturing units. An essential condition requires operations to have started before March 31, 2023. The establishment of manufacturing bases by giants like Apple and Foxconn in India has shown the advantages of this provision. To further boost the sector, the benefit of lower tax needs to be extended,” a top government source said.
Meanwhile, he stated many global firms are seeing India as an alternative to China, so it makes sense to bring in these benefits for the manufacturing companies. In 2019, the government announced that any new domestic company incorporated on or after October 1, 2019, making fresh investment in the sector, would have option to pay income tax at the rate of 15% if they commenced production on or before March 31, 2023. In the Budget presented on February 1, 2023, the government extended the concessional 15% corporate tax rate for new manufacturing units by one more year till March 2024.
The industry is hopeful the government would extend the deadline by another year. “The question is not whether or not the government will extend the deadline, the question is whether the extension would be for a year or more. We would want the government to extend the deadline for three years instead of one,” an industry representative told the newspaper on the condition of anonymity.