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New Delhi: The government expects businesses to act quickly and set up factories sooner than later, revenue secretary Tarun Bajaj told industrialists on Friday at a post-budget interaction, referring to the one-year extension of a concessional tax rate for new investors announced in the union budget for FY23.
The union budget presented by finance minister Nirmala Sitharaman on Tuesday proposed an extension of the 15% concessional tax rate meant for new production units. As per this, the last date for starting production by new units to avail of this benefit is end of March 2024.
Bajaj said that the idea behind the government raising its capital spending was to give a big push to the economy and once it happens, a lot of things will fall in place including job creation, growth and fortunes of businesses. “Once that starts happening, we also expect the private sector will then come and replace the public sector in terms of its investments and take the economy forward in the days to come. It is in that context that the 15% tax provision of new manufacturing companies has been extended by another year," said Bajaj.
The message, he said, was very clear. “We would like you to set up your factories and your manufacturing units and fast. The time limit is extended by one more year. Yes, there will be a sunset clause and then you will move to 22% which is what the corporate tax rate is (for those not availing of any tax breaks). This (the 15% rate) has been given as a special dispensation for manufacturing units to come up and set up their factories sooner than later," said Bajaj.
The capacity utilisation in the industry would be a major determinant for businesses to make big investment decisions.
“I am very happy that with the support of everybody, we have actually been able to more than double the capital expenditure in the last three years," he said.
A statement from industry body Assocham which organised the interaction said quoting Bajaj that the new corporate tax regime was settling down as more and more companies were exhausting their exemptions and moving towards the lower rate of 22%.
As companies exhaust their exemptions, they would start moving to the new tax regime because there is a big difference between 30% and 22%, the statement said quoting Bajaj.
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. While giving a message we are in consolidation of our finances, at the same time, we are willing to invest more," the statement said.
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