General Tax Incentives

The Government offers many incentives to investors in India with a view to stimulating industrial growth and development. The incentives offered are normally in line with the government's economic philosophy, and are revised regularly to accommodate new areas of emphasis. The following are some of the important incentives offered, which significantly reduce the effective tax rates for the beneficiary companies:

Five year tax holiday for:
- Power projects.
- Firms engaged in exports.
- New industries in notified states and for new industrial units established, in electronic hardware/software parks.
- Export Oriented Units and units in Free Trade Zones.
- As of 1994-95 budget firms engaged in providing infrastructure facilities, can also avail of this benefit.
Tax deductions of of 100 per cent of export profits.
Deduction of 30 per cent of net (total) income for 10 years for new industrial undertakings.
Deduction of 50 per cent on foreign exchange earnings by construction companies, hotels and on royalty, commission etc. earned in foreign exchange.
Deduction in respect of certain inter-corporate dividends to the extent of dividend declared.

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Keywords:

taxation, direct taxation, indirect taxation, tax planing, tax, general tax, tax holiday, tax rebates