These benefits have now been extended to March 31, 2025. This offers tax certainty to start-ups and investors around continuity of tax incentives. Surprising, however, the Government has not extended the concessional corporate tax rate of 15 per cent, which is currently available to newly set up manufacturing companies that have commenced manufacturing or production prior to March 31, 2024. This may be a setback for the Make in India initiative.

Notably, the Government has also announced its decision to withdraw any outstanding tax demands that are unverified, not reconciled or disputed for amounts up to INR 25,000 for the period up to financial year 2009- 2010 and amounts up to INR 10,000 for the financial years 2010-2011 to 2014-2015. This will offer a much-needed reprieve to several legacy tax cases of petty amounts that need to be cleared from the system.

The interim budget offers a segue into the full budget that the new Government will announce in July. Some key asks from the industry that still need the government’s attention include the simplification of the TDS regime that currently spans across multiple provisions and requires taxpayers to characterize each payment and determine if monetary thresholds are met depending on the taxable status of the payee.

Similarly, the rationalization of capital gains tax regime is also a long-standing demand from the industry, which believes that the distortionary impact of having different rates across asset classes and investors impacts the development of Indian capital markets and promotes inequity. Some other expectations include the introduction of a tax settlement procedure and measures to address the delays in appellate proceedings. It is also hoped that the Government will consider tax incentives for start-ups, innovation, and green energy in the next turn of the budget.

This article was originally published in The New Indian Express on 2 February 2024 Written by: Gouri Puri, Partner. Click here for original article

Read Less-