PwC proposes tax incentives to attract FDI
The government should analyse the possibilities of fiscal incentives to draw interest of the investors and entrepreneurs in power and automobile sectors along with development of infrastructure and backward areas, PricewaterhouseCoopers said in its pre-budget analysis.
These incentives not only attract foreign investments to meet the rising investment requirements to boost economic growth but also contribute to the macroeconomic stability by enhancing employment opportunities, it said.
To attract new investments in these areas which would boost the economic growth of the country, the government should consider policies to remodel the existing incentives, said the global network of firms delivering world-class assurance, tax and consulting services.
Sushmita Basu, partner of PwC; Kapil Basu, director; Alok Goenka, assistant manager, and Sk Aminul Islam, associate manager of PwC, prepared the analysis.
Options may be provided to the companies investing in these areas to claim income tax exemption for any consecutive 10 or 15 years, out of initial 15 or 20 years respectively starting from the year in which commercial operation starts, the PwC said.
Period of income tax exemption may be increased from 10 years to 15 years, like for the infrastructure sector and companies established in economic zones, according to the analysis. Similar income tax exemptions should also be provided to companies engaged in automobile industry to attract investors and FDI, it said.
Full income tax exemption may be provided throughout the 15-year period to units established in economic zones instead of the current reducing percentage method.
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