Page 169 - CW E-Magazine (1-10-2024)

Special Report

diisocyanate for use in the manu-
facture of Spandex yarn is reduced to
5% from 7.5%. Effective BCD on certain
specifi ed parts used for manufacture
of connectors is reduced to NIL from
5%/7.5%.

The aforesaid changes in BCD will
promote export competitiveness and
reduce input costs.

Corporate tax rates and personal of indexation while computing tax pay- Re-introduction of the VSV Scheme
income-tax rates able on long term capital gain arising is a welcome move, which will enable
While there are no changes to the on transfer of land or building or both companies to close long pending litiga-
corporate income-tax rates, revision in acquired before 23 July 2024. The tax tion thereby enabling channelising of
individual income-tax slabs under the payable by specifi ed taxpayers would resources and funds towards the growth
new concessional tax regime would be lower of the following: 12.5% of of the business and in-turn the economy
boost consumption, thereby providing capital gains without giving effect to at large, coupled with immunity from
an indirect impetus to demand for all indexation; or 20% of capital gains after interest, penalty and prosecution.
chemicals that act as essential inputs considering the benefi t of indexation.
for a wide array of manufacturing Concluding remarks
industries. The above is a welcome rationaliza- Considering the current challenges
tion measure. The lowered capital gains faced by the Indian chemical industry
Capital gains tax regime tax rate from 20% to 12.5% is likely due to global economic uncertainties,
Currently, provisions of the Indian to boost liquidity/fund raising plans geopolitical tensions, environmental
Tax Laws allow indexation benefi t on for promoters/founders/entrepreneurs and sustainability issues, and low-priced
cost of acquisition of immovable pro- thereby providing an impetus to invest- exports from China, the industry has been
perty being land or building or both ments in the chemical sector, especially advocating for targeted policy measures
for computing long term capital gains start-ups, in turn stimulating innovation such as introduction of PLI scheme and
(LTCG). The Finance Bill 2024 pro- and contributing to the growth of the development of PCPIR(s), to become
posed to withdraw such indexation bene- domestic chemical market as well as competitive in these challenging times.
fi t across all categories of long term the ‘Make in India’ initiative. This remains an unfi nished agenda.
assets including immovable properties.
Correspondingly, the rate of LTCG tax Vivad Se Vishwas Scheme 2024 Having said the above, the Budget
on such assets was also proposed to be The Hon’ble Finance Minister has 2024, which was approved by the
reduced from 20% to 12.5% (plus as a part of the Union Budget 2024-25 Parliament and received Presidential
applicable surcharge and cess). proposed to reintroduce the Vivad se assent on Aug. 16, 2024, has adeptly
Vishwas Scheme, 2024 (VSV Scheme) emphasized key areas such as manufac-
With the removal of indexation, to close the outstanding litigation. Any turing, infrastructure, employment, and
where transfer of immovable property appeals pending before Commissioner skill development, while also focusing
takes place on or after 23 July 2024, in of Income Tax (Appeals), Income Tax on sustainable and inclusive growth.
certain cases where the price rise was Appellate Tribunal (ITAT), High Court This approach is likely to create a con-
limited as compared to infl ation, the and Supreme Court as on 22 July 2024 ducive environment for investment
taxpayers faced increased tax liability are proposed to be covered under the and innovation, paving the way for
as compared to old regime of 20% tax said scheme. the expansion of the Indian chemical
rate with indexation. In order to grant industry. The Government has followed
relief from such excess tax liability A taxpayer desirous of availing the a path of fi scal consolidation while
arising to resident individuals and Hindu scheme needs to just pay 100%/110% simultaneously ensuring the protection of
Undivided Family (HUF) (specifi ed of the disputed tax, and enjoy complete vulnerable communities and channel-
taxpayers), the amended Income-tax waiver/immunity from interest, penalty ling investments into the productive
Act, has proposed to restore the benefi t and prosecution. sectors of the economy.

Chemical Weekly October 1, 2024 169

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