The govt is also examining extension of tax holiday for units operating or planning to set up operations in special economic zones
With promotion of clean energy high on government agenda, the upcoming Budget is likely to incentivise manufacturing of electric vehicles (EVs) in the country.
This is also expected to drive foreign direct investment or FDI into the country.
In line with the government’s road map for EVs in the next four years, the Budget may offer investment-linked incentives to manufacturers with respect to capital expenditure incurred for setting up operations, according to officials in the know.
“With a clear timeline to switch to clean energy vehicles, we are examining tax incentives to encourage players into the EV segment. Besides operations, investment in technology transfers and R&D will also need to be encouraged,” said a government official.
The Budget for FY20 may allow deduction on account of capital expenditure incurred for setting up business under Section 35AD(1) of the Income Tax Act for environment friendly EVs. The move will help bring down tax liability of such firms, leaving them with more income to invest in technology transfers.
Source: Business Standard
