India's Concessional Tax Regime for Manufacturing Sector Approaches Sunset Date- Industry View ( January 16, 2024 )

India had extended the corporate concessional tax rate of 15 percent for manufacturing companies incorporated on or before from March 31, 2024. As this date comes closer, industry stakeholders are petitioning for an extension from the government and an expansion of the scheme’s benefits.

As the interim union budget for FY2024-25 approaches, Indian companies eagerly await a decision regarding the extension of the sunset period for availing the concessional tax rate of 15 percent for the establishment of greenfield manufacturing units. In February 2022, Revenue Secretary Tarun Bajaj expressed the government’s eagerness for domestic companies to promptly establish new manufacturing units due to the sunset clause of the concessional regime.

Read: Corporate Income Tax in India

What is the concessional tax regime?

• In September 2019, following a reduction in the corporate tax rate, the government announced that any new domestic company incorporated on or after October 1, 2019, making fresh investments in manufacturing, could choose to pay income tax at a reduced rate of 15 percent. This privilege applied if they commenced production on or before March 31, 2023, without availing other incentives.
• In the 2022-23 Union Budget, Finance Minister Nirmala Sitharaman extended the concessional 15 percent corporate tax rate for manufacturing companies incorporated on or before March 31, 2024.