PwC Recommends Extension of 15% Corporate Tax for New Manufacturing Unit

PwC India has urged the government to extend the concessional 15% corporate tax rate for new manufacturing units, which ended in FY24, for at least five more years. This extension is aimed at boosting domestic manufacturing and fostering import substitution.

PwC partners highlighted this key industry demand on Wednesday, suggesting that the Centre should consider it for the upcoming full Budget.

Earlier reports indicated that the government might introduce a new scheme with a concessional corporate tax rate for new manufacturing units in the Budget. The proposed scheme would likely resemble the previous one, offering a 15% tax rate compared to the standard 22%, which ended on March 31, 2024.

The initial 15% tax regime was established in September 2019 for domestic manufacturing companies incorporated after October 1, 2019, and commencing production before March 31, 2024. This move was intended to incentivize manufacturing with a competitive tax rate. Industry leaders and tax experts had requested an extension of this regime during the interim Budget, but the Centre declined.

PwC emphasized that extending the sunset date would make India more attractive for new capital investments, boost the domestic economy, and encourage exports. Additionally, PwC suggested introducing a one-time settlement scheme to resolve past customs litigations, similar to the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019, and the Vivad Se Vishwas scheme for income tax.

PwC Partner Pratik Jain noted that around 30,000 cases, involving over Rs 40,000 crore, are pending in various courts. An amnesty scheme could significantly reduce these cases, increasing government revenue and providing relief to businesses. record could also qualify by appointing experienced fund managers and meeting specific AUM requirements.

PwC also recommended implementing group taxation, consolidating financials of companies within the same group for tax purposes. Currently, separate business verticals must file individual Income Tax Returns (ITRs), requiring substantial time and effort for compliance. A tax consolidation scheme would streamline tax compliance, reduce administrative costs for revenue departments, and lower compliance costs for corporate taxpayers.

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