The government is attempting new tax incentives to boost investments and sustainable economic growth which may involve introducing a second 15% concessional tax regime for specific industries as sources suggest. The government is probably going to reissue a revised version of the 2019 Taxation Laws (Amendment) Ordinance to encourage capital investment, create employment and sustain growth. It is possible that this effort will be highlighted in the upcoming Union Budget on February 1. The previous scheme that ran from March 2024 was successful in enhancing government revenue and economic output. The global tax environment is changing and with expectations of lower corporate tax rates in the US, India is trying to maintain its competitiveness for foreign investors. Industrialists think that the incentive should be extended beyond manufacturing to service sectors that create employment. It was also effective as there was an increase in corporate tax revenue from ₹5.57 lakh crore in 2019-20 to ₹9.11 lakh crore in 2023-24. To make the effort sustainable, the industry leaders have advised a broader and more prolonged implementation. They also state that existing companies should also be permitted to put up new facilities and enjoy the same, keeping investment and economic growth alive. Therefore as manufacturing and mining slow down, deliberate tax relief may be what India needs to maintain its growth rate and also to attract foreign capital.
Tax Incentives May Return to Drive Economic Growth
