Finance minister Nirmala Sitharaman on Monday said she will consider extending the deadline for availing a lower tax rate on new investments in manufacturing as the government weighs options to ease strain on companies.
“I will see what can be done. We want industry to benefit from the 15% corporate tax rate on new investments and I take your point for considering an extension in the deadline of 31 March 2023,” Sitharaman said.
The government is willing to give additional time to businesses as they are in the process of recovering from the devastating effects of the coronavirus pandemic, including loss of sales because of the more than two-month-long lockdown to stem the spread of the virus, Sitharaman told the national executive committee members of the Federation of Indian Chambers of Commerce and Industry (Ficci).
The government slashed corporate tax rates in September to reverse an economic slowdown. Firms not availing tax sops could opt for a 22% rate and new manufacturing companies that start production before March 2023 could opt for a 15% rate.
The government also lowered from 18.5% to 15% the rate of minimum alternative tax, a provision that aims to bring profitable firms that pay zero or marginal taxes into the tax net. The lowering of rates was aimed at making the corporate tax regime globally competitive and increase post-tax earnings of firms for reinvestment. However, the outbreak of covid has hit economic growth. The government has now taken a slew of measures to improve liquidity for businesses and has suspended the operation of the bankruptcy code for at least six months.
“We have fairly clearly addressed the issue of liquidity. There is definitely the availability of liquidity. We will look into it if there are still issues,” the minister said. Every government department has been told to clear payments pending to small businesses, she said. If there is any problem with any department, the government will look into it, she added.
The minister also said the emergency credit facility announced recently is not restricted to micro, small, and medium enterprises and can be availed by any business meeting the eligibility criteria.
Sitharaman said the final call on reducing the goods and services tax (GST) rate for sectors hit by covid will be taken by the GST Council. “GST rate reduction will go to the council. But the council is also looking for revenue. The decision for reduction in rate for any sector has to be taken by the council,” she said.
Revenue secretary Ajay Bhushan Pandey said tax refunds worth ₹35,000 crore have been given to corporates in the past few weeks.
News Source: Livemint