Industry body PHDCCI has sought re-introduction of 15% concessional tax rate for new manufacturing units in the 2026-27 Budget. The industry body has submitted pre-budget recommendations to the Finance Ministry requesting re-introduction of section 115BAB of the Income Tax Act, wherein a concessional rate of corporate tax of 15% plus surcharge was introduced for new manufacturing units complying with certain conditions.
What did PHDCCI say?
The industry body said that a concessional rate would provide a major incentive for foreign companies to set up subsidiaries in India and invest in manufacturing units.
Section 115BAB of the Income Tax Act, introduced via an ordinance in 2019, a concessional rate corporate tax rate of 15% plus surcharge was introduced for new manufacturing units complying with certain conditions. The facility was available for companies that started manufacturing on or before March 2024, but was not extended thereafter.
It also requested for reduction in rates of taxation for individuals, partnership firms and limited liability partnerships. It suggested that the maximum tax rate for income up to Rs 30 lakh should be 20% and from Rs 30 lakh to Rs 50 lakh, 25% and beyond Rs 50 lakh, it could be 30%. This will not only increase compliance and tax buoyancy but also lead to major relief to the middle class, it said.
PHDCCI’s recommendation
The last Budget announced major personal income tax relief under the exemption-less new tax regime, with exemption for annual income up to Rs 12.75 lakh (including standard deduction of Rs 75,000). The PHDCCI noted in spite of tax foregone of close to Rs 1 lakh crore due to this, tax collections have been growing satisfactorily.
For early disposal of appeals by the Commissioner of Income Tax (Appeals), PHDCCI recommended that a statutory period should be specified within which the commissioner has to pass the appeal order.