Extend concessional tax rate of 15% to domestic infra industry, LLPs: India Inc

Extension of the concessional tax rate of 15% to domestic infrastructure companies and non-corporate taxpayers like LLPs and trusts, exemption from withholding tax on payment of interests on overseas bonds having longer maturity period than 5 years and allowing carry forward and set off of business losses for service industry are some of the prominent direct tax proposals by industry for the Vote on Account.

Currently companies set up after October 1 get a concessional tax rate of 15% which are engaged in the business of manufacture or production of an article or things, including generation of electricity.

However this concessional tax rate is not available to the domestic companies engaged in the infrastructure sector. Industry seeks that extension of such services to domestic companies engaged in the infrastructure sector like Road, Port, Airport, Hotels, commercial complexes and malls may boost infrastructure activities in the country.

Also while companies pay tax at 25.17%, for limited liability partnership (LLPs), firm, Trusts, association of persons (AoPs) tax rate remains high at 30% plus and after surcharge and education cess it effectively works out to 42.7440% in some cases, creating a wide gap between corporate and non-corporate taxpayers.

The Industry also demanded that as more service undertakings have been set up and evolved, service industry, should be entitled to benefits under section 72A of the income tax Act which encourages amalgamation and restructuring of a company by allowing carry forward and set-off of accumulated business losses and unabsorbed depreciation of the predecessor to the successor.

“For the objects with which Section 72A has been inserted to allow benefit of carry forward and set off of accumulated loss and unabsorbed depreciation, the benefit may be extended to service, investment and trading undertakings,” read the tax memorandum submitted by the PHD chamber of commerce and industry to the centre.Industry also sought clarification on applicability of “prerequisites” as it says that it has complicated the travel and lodging expenditure of a consultant providing services and out of the pocket expenditure.The Industry has also sought that tad deducted as source (TDS credit) may be allowed to the deductee irrespective of the Assessment Year in which the corresponding income is offered to tax.

The Finance Ministry has kick started consultations for the Union Budget 2024-25 on October 10 which will continue till November 14, which includes meetings with individual ministries, industry stakeholders, economists among others.