In a bid to boost manufacturing growth and create employment, the government has invited comments on a range of suggestions received in this regard from various ministries and other stakeholders. These include potential financial incentives under the Income Tax Act, labour laws, tax incentives and subsidies for skilling of employees, upgrading and improving the employment exchanges among others.
On the income tax front, it has been suggested that existing policy be relaxed by extending tax deduction of 30% to additional emoluments of employees, which is not part of the wage. This would be available even for the new employees for a period of three years from recruitment.
Additionally, this relaxation would be applicable even if the employers expands workforce by less than 10% of its total workforce. The existing benefits to manufacturing sector is based on expansion of workforce by more than 10%. The suggestions enumerate that these benefits should be extended to new employees with less than Rs 6 lakh per annum of total emoluments. Further, this would apply to all employers under the scope of tax audit, irrespective of size.
Among other suggestions received by the government, it has been proposed that measures could be adopted to ensure that enterprises with large job creation may not be liable to pay income tax.