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Govt likely to extend tax breaks beyond 2012
25 Jan '11
2 min read
In view of the recommendations of an expert panel, the government is expected to extend the tax break facility for few new industries even beyond 2012, so as to help their survival even during global recession.
As per the findings of the panel on direct tax law, if the tax benefit is done away with, it would really become impossible for the domestic firms to retain their competiveness in the world market. Thus, it has been recommended in the draft bill of the Direct Tax Act 2012 to continue the tax concessions for 16 categories of industries even after 2012, and to pull out the same in phases over the next five years.
Initially the government said that, it won't be extending the facility beyond June 30, 2012, but then it is necessary to do so to attract more investments in the concerned industries.
However, in order to enjoy these tax concession facilities for a longer period, the new industries will have to be established in line with certain specific norms.
As per the proposed tax bill, the government would allow complete tax exemption to the new industries for the first two years as they go commercially functional, while these industries would be granted 50 percent tax exemption or will have to pay 50 percent of the total tax amount for the third and fourth year.
Further, they would be charged at 75 percent of the actual tax rate for the fifth year, while from the sixth year onwards usual tax rate of 37.5 percent would apply.
Initially, the tax concession facility would be continued for 16 categories of new industries, and with passage of time as these industries would gain self reliance, gradually the facility would be withdrawn. The facility would be continued for the newly established units involved in production of textile machinery, high-value garments, textiles, jute products and similar other industries.
The government withdrew the facility from 11 industries in 2004, from seven industries in 2005 and five industries in 2006.
As per the findings of the panel on direct tax law, if the tax benefit is done away with, it would really become impossible for the domestic firms to retain their competiveness in the world market. Thus, it has been recommended in the draft bill of the Direct Tax Act 2012 to continue the tax concessions for 16 categories of industries even after 2012, and to pull out the same in phases over the next five years.
Initially the government said that, it won't be extending the facility beyond June 30, 2012, but then it is necessary to do so to attract more investments in the concerned industries.
However, in order to enjoy these tax concession facilities for a longer period, the new industries will have to be established in line with certain specific norms.
As per the proposed tax bill, the government would allow complete tax exemption to the new industries for the first two years as they go commercially functional, while these industries would be granted 50 percent tax exemption or will have to pay 50 percent of the total tax amount for the third and fourth year.
Further, they would be charged at 75 percent of the actual tax rate for the fifth year, while from the sixth year onwards usual tax rate of 37.5 percent would apply.
Initially, the tax concession facility would be continued for 16 categories of new industries, and with passage of time as these industries would gain self reliance, gradually the facility would be withdrawn. The facility would be continued for the newly established units involved in production of textile machinery, high-value garments, textiles, jute products and similar other industries.
The government withdrew the facility from 11 industries in 2004, from seven industries in 2005 and five industries in 2006.
Fibre2fashion News Desk - India
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