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Tax exemption to industry and commerce sectors



Tax exemption to industry and commerce sectors 

Direct Tax
Various tax concessions in the form of exemptions/ deductions etc. have been provided under the Income-tax Act, 1961 which have been availed by different sectors of Commerce and Industry also. Cumulative figures of revenue impact of direct tax incentives for the last five years are as follows :

(Amount in Cr.)
Financial Year
2011-12
2012-13
2013-14
2014-15
(projected) 2015-16
Corporate Incometax
61,756
68,720
57,793
65,067
68,711
Personal Incometax
39,375
33,535
35,254
53,526
59,928
Total
1,01,131
1,02,255
93,047
1,18,593
1,28,639

No sector wise details of industry are however maintained and section wise details of revenue impact of direct tax incentives is presented before Parliament with Budget in the form of document titled, “Statement of Revenue Impact of Tax Incentives under the Central Tax System”.
Various tax incentives in the form of exemptions/deduction/special rates of depreciation/rebates, etc are provided under the Income-tax Act,1961 to promote exports; balanced regional development; creation of infrastructure facilities; employment; donations for charity and rural development; scientific research and development; and the cooperative sector.
Indirect Tax
Customs and Central excise duty exemptions are extended to goods in general, considering inter alia the public interest. The revenue impact of tax incentives on account of exemptions / concessions from customs and excise duty for last five financial years is as under:


(Amount in Cr.)
Financial Year
2011-12
2012-13
2013-14
2014-15
(projected) 2015-16
Customs Duty
2,36,852
2,54,039
2,60,714
2, 38, 967
2, 57, 549
Excise Duty
1,95,590 
2,09,940
1,96,223
1, 96, 789
2, 24, 940
Total
4,32,442 
4,63,979
4,56,937
4, 35, 756
4, 82, 489

Tax concessions are provided as a part of overall fiscal incentives provided by the government to realize macroeconomic objectives and achieve policy goals of development and growth of various sectors of economy. No such quantitative exercise for the outcome of reliefs provided to industry and commerce sectors is done.
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Disinvestment target during financial year 2015 16
The budget estimate (BE) for disinvestment during the financial year 2015-16 was Rs. 69,500 crore comprising Rs. 41,000 crore from disinvestment of Central Public Sector Enterprises (CPSEs) and Rs. 28,500 crore from strategic disinvestment. Against this target, Government has realized Rs.23, 997crore (approx) from disinvestment of CPSEs during the year 2015-16. In addition, an amount of Rs. 1023 crore (approx) has been realized as buyback tax on account of buyback transaction, undertaken by unlisted CPSEs and Rs. 8,152 crore on account of sale of bonus debentures of NTPC to EPFO.

The budget estimate (BE) for disinvestment during the financial year 2016-17 is Rs. 56,500 crore, comprising Rs. 36,000 crore as disinvestment receipts from CPSEs and Rs. 20,500 crore from strategic disinvestment.

In order to achieve the disinvestment target of financial year 2016-17, the following steps have been taken by the Government:

(i) An amount of Rs.3,183 crore (approx) has been realized from disinvestment of NHPC and Employee OFS of IOCL and NTPC.

(ii) Government has expressed intent to participate in buyback shares proposed by NALCO, MOIL, NMDC and CIL.

(iii) Some CPSEs have been identified for disinvestment in sectors like mineral and metal, oil, energy, capital goods as well as some mid-size and small stocks.

(iv) In line with the announcement made in the Budget 2015-16, the Cabinet Committee on Economic Affairs in its meeting held on 17th February, 2016 approved the structure for ''strategic disinvestment'' of CPSEs. 

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Investment on Infrastructure Schemes
During Financial Year (FY) 2014-15 and 2015-16, projects involving investment of Rs. 25,878 crore were awarded by Major Ports. National Highway Authority of India (NHAI) responsible for construction of major roads and highways in India invested Rs. 41,087 crore and Rs. 63,803 crore in FY 2014-15 and 2015-16, respectively. Ministry of Railways have spent a total of Rs. 58,718 crore and Rs 93,795 crore in FY 2014-15 and FY 2015-16, respectively on development of railway infrastructure. As per the information provided by Reserve Bank of India (RBI), Foreign Direct Investment (FDI) of Rs. 1.17 lakh crore was received in infrastructure sector including roads, railways, ports etc in last two years.

Government has taken various steps to attract investment in infrastructure sector which includes launching of innovative financial vehicles such as Infrastructure Debt Funds (IDFs), Real Estate Investment Trusts (REITs)/Infrastructure Investment Trust (InVITs), National Infrastructure Investment Fund (NIIF), laying down a framework for municipal bonds, issuance of Tax Free Bonds, allowing complete pass through of income tax to securitization trusts including trusts of Asset Reconstruction Companies (ARCs), bringing in 5/25 Scheme to extend long tenor loans to infrastructure projects, take-out finance, flexible structuring and refinancing of project loans, higher credit exposure limits for single and group borrowers, and single NBFC/NBFC-Asset Financing Company and Infrastructure Financing Company, amendment in investment norms of insurance companies, Employees’ Provident Funds, etc.

This information was given by Minister of State for Finance Shri. Arjun Ram Meghwal today in written reply to a Rajya Sabha question. 

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