15% tax for new investment in manufacturing to have sunset clause; India moving towards record Tax-GDP ratio: Revenue Secretary at ASSOCHAM meet
New Delhi : Exhorting India Inc to speed up new investment in manufacturing, Revenue Secretary Mr Tarun Bajaj today said there is a sunset clause on the special dispensation of concessional 15 per cent tax on companies setting up greenfield manufacturing facilities. Therefore we encourage businesses to set up before the sunset date.
He was responding to a query whether the 15 per cent concessional corporate tax on new manufacturing units would be a permanent feature or not. ” So, this has been given as a special dispensation for manufacturing units to set up their factories sooner than later.”.
The Revenue Secretary also shared the optimism about the tax buoyancy as the economy is on the path of recovery. ” Our Tax to GDP ratio which had gone below 10 per cent in the year we had brought down the corporate tax, would be the highest or one of the highest -direct and indirect taken together in the current financial year”.
He said the new Corporate Tax regime is settling down as more and more companies are exhausting their exemptions and moving towards the lower rate of 22 per cent. ” My own assessment is, as companies exhaust their exemptions, they would start moving to the new tax regime because there is a big difference between 30 and 22 per cent the corporate India would be benefited”.
Enumerating the features of the Budget for 2022-23, Mr Bajaj said the quality of expenditure has been improving for the past three years. ” It was very important to give a push to the economy, GDP. While giving a message, we are in consolidation of our finances, at the same time we are willing to invest more”.
He said the capital expenditure as a percentage of GDP which was languishing has doubled in the past three years.
In his presentation, the Chairman of the Central Board of Direct Taxes, Mr J B Mohapatra, Chairman, Central Board of Direct Taxes, (CBDT), Ministry of Finance; said the Finance Bill mainly focuses on the interest of taxpayers. Provisions have been inserted to cut down litigation. A new section 170 A has been added to make life easier for a restructured entity, approved through regulatory and NCLT routes. He also highlighted advantages of allowing revised tax returns.
Mr. Deepak Sood, Secretary General ASSOCHAM said, GST has become the biggest source of the government’s indirect tax collection. In 2021-22, over 57% of the indirect tax collection came from GST.The enhanced transparency and stability of India’s tax regime is underlined by the gross GST collections for January 2022 crossing ₹1.4 lakh crores – the highest since the inception of GST.
Introduction of Central Bank Digital Currency (CBDC) with the underlying blockchain technology is a smart move to let the official system stay ahead of the disruptive and unregulated global systems. Digital Rupee riding on blockchain, along with the existing UPI gateways would take India’s fintech ecosystem to a new high, said Mr. Sood.
Mr. Vineet Agarwal, President ASSOCHAM said, the Budget session has taken some prudent initiatives for MSMEs and India Inc for start-ups. The tax concession period has been extended by one more year, which in my opinion is a very positive move. Likewise, a 15% tax has been decided for the newly incorporated manufacturing unit. The period of incorporation has been increased by one more year to 31-3-2024. This will further boost manufacturing activities.
The extension of ECLGS scheme is a welcome move for MSMEs. The credit and fiscal support of 5 lakh crore will give a huge boost to this sector encouraging new businesses to come to the fore. This announcement will certainly generate more than 10 lakh of employment opportunities in a short span of time, said Mr. Agarwal.
Mr. Rahul Garg, Chairman, National Council on Direct Taxes, ASSOCHAM said that proposed amendment under section 115 BBD that currently allows the foreign dividend to be taxed at concessional rate helps Indian companies to compete in the overseas bidding as such the proposal should be reconsidered. Others who also spoke during the session was Mr. Rakesh Nangia, Co-chairman, National Council on International Taxes, ASSOCHAM & Chairman, Nangia Andersen India.