Taxation - Incentives, Rebates and Allowances
- General Tax Incentives
In each section of Personal
Tax (income tax), Indirect taxes (sales, excise & customs duty)
and the corporate taxes there are certain rebates given to the tax
payer if he fits in the prescribed criteria. These concessions or
Tax Holidays as they call are meant to attract more and more people
to pay tax. These rebates also mean less 'pinch' on the pockets
and a good fast growth of economy.
General Tax Incentives
The Government offers many incentives to investors
in India with a view to stimulating industrial growth and development.
The incentives offered are normally in line with the government's
economic philosophy, and are revised regularly to accommodate new
areas of emphasis. The following are some of the important incentives
offered, which significantly reduce the effective tax rates for
the beneficiary companies:
- Five year tax holiday for :
- Power projects.
- Firms engaged in exports.
- New industries in notified states and for new industrial units established,
in electronic hardware/software parks.
- Export Oriented Units and units in. Free Trade Zones.
- As of 1994-95 budget firms engaged in providing infrastructure facilities,
can also avail of this benefit.
- Tax deductions of of 100 per cent of export profits.
- Deduction of 30 per cent of net (total) income for 10 years for new industrial
undertakings.
- Deduction of 50 per cent on foreign exchange earnings by construction companies,
hotels and on royalty, commission etc. earned in foreign exchange.
- Deduction in respect of certain inter-corporate dividends to the extent of dividend
declared.
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