Budget 2020-21 + FINANCE BILL, 2020

Amendment of section 115BAB of the Act to include generation of electricity as manufacturing.

The TLAA, inter-alia, inserted section 115BAB in the Act. The newly inserted section provides that new manufacturing domestic companies set up on or after 1st October, 2019, which commence manufacturing or production by 31st March, 2023 and do not avail of any specified incentives or deductions, may opt to pay tax at a concessional rate of 15 per cent. Further, Explanation to clause (b) of sub-section (2) thereof provides that for the purposes of the said section, businesses engaged in development of computer software, mining, conversion of marble blocks or similar items into slabs, bottling of gas into cylinder, printing of books or production of cinematograph film or any other business as may be notified by the Central Government will not be considered as manufacturing or production.

Representations have been received from various stakeholders requesting to provide that the benefit of the concessional rate under section 115BAB of the Act may also be extended to business of generation of electricity, which otherwise may not amount to manufacturing or production of an article or thing. Accordingly, it is proposed to explain that, for the purposes of this section, manufacturing or production of an article or thing shall include generation of electricity.

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years.

[Clause 52]

 

 

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Budget 2020-21 + FINANCE BILL, 2020

Concessional tax for new manufacturers: generation of electricity treated as manufacturing allowing concessional rate subject to eligibility conditions. The amendment clarifies that manufacturing or production for the concessional tax regime includes generation of electricity. Eligible new domestic manufacturing companies-set up on or after 1 October 2019 and commencing by 31 March 2023-that do not avail specified incentives or deductions may opt for the concessional tax provision. The change takes effect from 1 April 2020 and applies from the assessment year 2020-21 onward.