Govt plans to give tax breaks to new manufacturers

Firms may get six-year tax exemption

 As an incentive to increase employment avenues, the government is planning to give tax exemptions to new and upcoming manufacturing units which are also employment intensive and endeavour hand out more jobs than the limits set for themselves.

 The step is being though out in order to encourage setting up of more and more employment intensive industries keeping in mind that manufacturing has been placed at the centre-stage of ‘Make in India’ programme through which the government seeks to create 100 million jobs.

 According to the initial plan, such companies may be given a complete personal and corporate tax holiday for two years from the date at which they start production. Thereafter, for the next two years, the tax break is expected to be 50 per cent and another 25 per cent for further two years. There is expected to be a cap on the tax holiday in the sixth year of their production.

The plan, which is still in incubation stage, may be announced in the Budget for 2016-17 and incorporated in the manufacturing policy thereafter.

Sources said that the finance ministry recently had a high level meeting on the issue. Sectors such as textiles and leather among others may be short listed for such tax benefits as these are labour intensive have potential for more job generation.

Sources also said that there was no link between the proposed tax holiday and Finance Minister Arun Jaitley’s Budget announcement about a subsequent reduction in the rate of corporate tax from the current 30 per cent to 25 per cent.

“The proposed tax break is only for new manufacturing units and the government will not lose much by the way of tax exemption to them. On the other hand, it will help in employment generation,” sources said.

Big boost for manufacturing sector

 The government is planning to give tax exemptions to new and upcoming manufacturing units

Through ‘Make in India’ programme the government seeks to create 100 million jobs

 Companies may be given a complete personal and corporate tax holiday for two years

 Sectors such as textiles and leather among others may be short listed for such tax benefits