Government May Extend Concessional 15% Tax For New Manufacturing Units By One Year: EY

The government may extend the concessional 15% income tax rate for corporates to set up new manufacturing units by one year till Mar. 31, 2025, to encourage private investments, EY said in its 2024 Budget expectation report.

Finance Minister Nirmala Sitharaman is scheduled to present the interim Budget for 2024-25 on Feb. 1.

EY in its Budget expectations report also said that in the interim Budget, the government would continue its focus on ease of paying taxes, while legislative reforms will stay work-in-progress.

To encourage more investment in the manufacturing sector and exports, the interim Budget may extend the sunset date for commencing manufacturing from Mar. 31, 2024, till Mar. 31, 2025, for companies availing 15% concessional income tax rate, EY said.

The government in 2019 announced that any new domestic company incorporated on or after Oct. 1, 2019, making fresh investment in manufacturing, will have the option to pay income tax at the rate of 15% if they commenced their production on or before Mar. 31, 2023.

In the Budget presented on Feb. 1, 2023, the government extended the concessional 15% corporate tax rate for new manufacturing units by one more year till March 2024.

The EY report also said that while global growth prospects remain subdued, India is expected to clock a 7% growth in the current fiscal, led by its resilient domestic demand.

In the medium term, India's growth is critically dependent on its saving and investment rates. It is the household sector financial savings that become available for investment by the public and the private corporate sectors, EY said.