The Finance Bill 2013-14 proposes an investment allowance at the rate of 15 per cent to a manufacturing company that invests more than Rs.100 crore in plant and machinery during the period 1.4.2013-31.3.2015. Presenting the Union Budget in the Lok Sabha today, the Finance Minister Shri P.Chidambaram said that no large economy can become truly developed without a robust manufacturing sector. He also propsed to extend the ‘Eligible Date’ for projects in the power sector to avail of the benefit under Section 80-IA of the Income Tax Act from 31.3.2013 to 31.3.2014.

Mr. Chidambaram also announced that the concessional rate of tax of 15 per cent on dividend received by an Indian company from its foreign subsidiary shall be continued for one more year. This will encourage repatriation of funds from overseas companies . Further, the Indian company shall not be liable to pay dividend distribution tax on the distribution to its shareholders of that portion of the income received from its foreign subsidiary.

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DSM/RC/nb/22

(Release ID :92738)

Investment allowance for large manufacturing investments introduced, while concessional tax on foreign subsidiary dividends is extended and DDT exempted. A 15 percent investment allowance is provided to manufacturing companies making substantial plant and machinery investments within the two-year window from April 1, 2013, intended to promote large-scale manufacturing capacity expansion. The concessional 15 percent tax on dividends received from foreign subsidiaries is extended for one year, and distributions of that income to shareholders are exempt from dividend distribution tax; the eligibility date for power-sector project tax benefits is extended by one year.