Government considering extending concessional corporate tax rate for new manufacturing firms

In an attempt to bolster the manufacturing sector and attract investments, the government is reportedly contemplating an extension of concessional corporate tax rates for new manufacturing firms in the upcoming interim budget, according to sources from CNBC-TV18.

Discussions are currently underway to potentially extend the sunset clause by at least one to two years, with the existing clause scheduled to expire on March 31, 2024.

As of now, new domestic manufacturing companies can benefit from a 15% corporate tax rate under Section 115BAB. To qualify for this concession, the condition was set that these new manufacturing units must commence operations by the end of March 2024.

With the impending expiration of this sunset clause, the government is exploring the possibility of extending it, although a final decision has not yet been reached.

It is also one of the major demands of the industry and Indian Inc. feels that if extended, this will be pivotal in attracting investments and will also help continue to promote the ongoing Make in India drive, which gels well with the idea of making India a manufacturing hub.

The upcoming interim budget announcements will reveal whether this proposal successfully makes its way into the key policy measures outlined by the government.