10-year tax holiday to jack up manufacturing

In a much-needed pre-Budget bonanza to the manufacturing sector, which is showing signs of deceleration, the government on Thursday extended tax benefits to industrial units under a new Industrial Park Scheme, 2008. The scheme, notified on Thursday, would provide a 10-year tax holiday under Section 80-IA (4)(iii) of the Income Tax Act, 1962. The scheme extends a 100% income tax rebate for 10 years to any undertaking, which begins to develop, develop and operate or maintain and operate an industrial park between April 1, 2006 and March 31, 2009, an official release said. Under the scheme, all such industrial parks will have to take approval from Central Board of Direct taxes (CBDT) before availing of the tax benefits. Parks with a minimum of 30 industrial units and minimum of 90% area allocated to industrial activity can apply for the scheme. The industrial park should be owned by only one undertaking and should have a minimum constructed floor area of 50,000 square metre. Also, no industrial unit, along with the units of an associated enterprise, shall occupy more than 25% of the allocable area, the release said. The decision would give a much-needed boost to the manufacturing sector, which is currently going through a slowdown. On Tuesday Prime Minister Manmohan Singh had set up a high-powered group headed by national manufacturing competitiveness council chairman V Krishnamurthy, to suggest steps to ensure growth in the sector. Jairaj Purandare executive -director-in-charge PricewaterhouseCoopers said, “This will make Indian manufacturing more competetive globally. Especially as China already gives similar sops to industrial undertakings. However, the government must be careful as to which schemes it should provide such benefits to .” The government had approved about 273 industrial parks developed between May 1999 to December 2007 under the earlier Industrial Park Schemes of 1999 and 2002. Of these, approvals to 42 parks were withdrawn. The government’s decision gives hope for extension of tax holidays under the Export Oriented Units Scheme and the Software Technology Park of India scheme - www.financialexpress.com