Building a new factory? Budget may extend concessional tax rate for a year

livemint.com:

NEW DELHI : The Union budget in July is likely to restore the concessional 15% corporate tax rate for new manufacturing facilities, a scheme introduced in 2019 that expired on 31 March this year, two persons aware of the matter said. The plan now is to extend this scheme by one to two years to facilitate fresh manufacturing investment, which is a priority for the National Democratic Alliance (NDA) government, one of the two persons cited above said on condition of anonymity. The Centre wants to give a strong thrust to the manufacturing sector as it could generate well-paid employment to a large number of people currently engaged in low-paid farm activities.

Besides adding jobs, the sector could capitalize on the enhanced public spending on infrastructure, foster innovation, make Indian businesses perform better in global markets and make the economy more resilient, say experts. Also read | Seasonal headwinds for India’s manufacturing sector The manufacturing sector, which accounts for 14% of the country’s gross domestic product (GDP), expanded 9.9% in 2023-24 after suffering a 2.2% contraction in the financial year prior. India’s manufacturing activity had slipped to a three-month low of 57.5 in May as intense heatwaves led to reduced working hours.

But in June, the manufacturing purchasing managers’ index increased to 58.5. A reading above 50 signals an expansion, and below that signals contraction. A spokesperson for the finance ministry did not reply to queries emailed on Tuesday.