Budget 2024: Modi 3.0 must extend 15% tax sop for new units, says PwC

Modi 3.0 should continue giving new manufacturing units a concessional corporate tax rate of 15 per cent for at least another five years, the international management consulting firm PricewaterhouseCoopers (PwC) India has recommended ahead of the Union Budget 2024 for FY25.

PwC India stated that such a tax sop in the manufacturing sector would strengthen domestic manufacturing and also help in doing away with imports at a faster rate.

Before the Interim Budget, the manufacturing industry had requested the government to extend the concessional tax structure for the sector by at least a year. The government, however, had declined.

The corporate tax rate of 15 per cent, aimed at incentivising all new units, came into effect in the fiscal year 2019-’20, or FY20, and it applies to domestic firms that were enlisted after October 1, 2019, and that became operational before the sunset date of March 31 this year.

“A further extension of the sunset date will enable India to remain attractive for making fresh capital investment, provide a boost to the domestic economy and also encourage exports,” a note from PwC said.

Speculations that Modi 3.0 may announce a fresh concessional scheme in the Union Budget has been doing the rounds for a while ever since the current scheme, offering a concessional corporate tax rate of 15 per cent, officially ended on March 31 this year.

Among PwC’s recommendations for the manufacturing industry is also the launch of a group taxation facility that would allow companies belonging to one group to be consolidated for taxation purpose.

The international management consulting firm also suggested that the government should consider launching a single-window settlement scheme for pending customs litigations, somewhat similar to the Vivad Se Vishwas scheme for Income Tax issues. According to PwC estimates, the sector has over Rs 40,000 crore locked in nearly 30,000 cases that are pending in the courts.

The Union Budget 2024 for FY25 is scheduled to be presented by Finance Minister Nirmala Sitharaman in Parliament on July 23.