15% tax holiday for manufacturing companies can be extended to service sector: Rajesh Gandhi

Rajesh Gandhi, Partner, Deloitte India, says in the infra space, sovereigns and pension funds are allowed to make tax-free investments up to March 24. That should be extended for a few more years to further boost foreign investment in the infrastructure and not just sovereign and pension funds, even PE investment should be allowed to make investment in the infrastructure on a tax-free basis.


What are the Budget expectations on capital gains tax, PEs and industry at large?
Rajesh Gandhi: There is a need to simplify the regime, bring down the rates, reduce the holding periods, the number of slabs etc. allow offset between long term and short term.


I think the tax holiday should be increased to a 30 or 40 year period for certain kinds of industries. Secondly, to encourage movement of skilled workforce from other locations to the GIFT City, there needs to be some incentivisation on personal tax funds.

There should be a separate regulatory and tax regime for the private equity sector. There was an announcement on the intention for that few years back but nothing has been done on the ground. I think once that is done, we will see the PE sector being treated in a special way and then channelling more investments over there.

The second is for the infra space, sovereigns and pension funds are allowed to make tax-free investments up to March 24. That should be extended for a few more years to further boost foreign investment in the infrastructure and not just sovereign and pension funds, even PE investment should be allowed to make investment in the infrastructure on a tax-free basis.

Green bonds are one more thing which needs to be given a certain boost from a tax point of view. And India has a very ambitious target of achieving 50% renewable energy by 2070. That can be done by giving certain tax incentives like lowering of tax rate or zero tax rate on interest, removing capital gains tax on transfer of green bonds.

The 15% tax holiday for manufacturing companies can be extended to the service sector, particularly the sectors which are high priority from a financial inclusion point of view, start-ups, fintech.