The central government is reportedly considering to reintroduce the 15 per cent concessional corporate tax rate scheme which was discontinued on end of the financial year 2024.
"We are analysing the benefits that have been given to those companies (who availed the 15 per cent corporate tax rate)...how they have functioned...how much manufacturing activity benefited from it," an official said as per the Financial Express report.
Earlier this year, EY mentioned in its Budget expectations report that the government might extend the scheme till March 31, 2025. However, no such extension was announced in the interim budget 2024-25. Currently, as there's no scheme in place the new manufacturing units will be liable to pay 22 per cent corporate tax.
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The scheme was introduced to give shape to the government's broader initiative of 'Make in India'. As per a media report, experts feel the reintroduction of the scheme can help lead India to its path of becoming a global manufacturing hub.
Finance Minister Nirmala Sitharaman in her budget for the FY2024-25 reduced corporate tax rates for foreign companies to 35 per cent from 40 per cent. The move will reduce the gap between taxes paid by domestic and foreign companies in the manufacturing sector. This will attract more foreign companies to invest in India.
Together with domestic and foreign capital, the country's manufacturing sector will drive overall economic growth.
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The concessional corporate tax scheme was introduced in 2019 and particularly focused on providing incentives to the manufacturing sector. The scheme encouraged private investment in the same with the help of a competitive tax regime.
It aimed to boost private investment in domestic manufacturing companies incorporated after October 1, 2019. The 15 per cent concessional corporate tax rate was for an indefinite period until March 31, 2024, when the government discontinued the scheme.
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