Strategic focus on critical minerals to Propel Domestic
Manufacturing and Strengthen the Make In India Initiative
The Honourable Finance Minister, in the 8th consecutive budget, lays down a well-defined strategy to focus manufacturing in India and promote employment generation in the county. The announcements were made to make reforms in Mining sector including for critical minerals and formation of State Mining Index.
Key policy measures proposed includes -
- Mining sector reforms, including those for minor minerals, proposed to be encouraged through sharing of best practices and institution of a State Mining Index
- A policy for recovery of critical minerals from tailings has proposed to be brought out
- The Government committed to set up an Export Promotion Mission, with sectoral and ministerial targets, driven jointly by the Ministries of Commerce, MSME, and Finance. It will facilitate easy access to export credit, cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets
- Requirements and procedures for speedy approval of company mergers to be rationalized. The scope for fast-track mergers will also be widened and the process made simpler
- The Government signed Bilateral Investment Treaties with two countries in 2024. To encourage sustained foreign investment and in the spirit of 'first develop India', the current model BIT will be revamped and made more investor-friendly
Key tax proposals related to the Metal & Mining sector have been discussed in this alert.
How does the budget impact
Metal and Mining sector?
Key amendments
Direct tax
Tax Rates
- No change in corporate tax rates for domestic and foreign companies
Increase time limit to file updated tax return
- Time limit to file updated tax return is increased from 2 years
from the end of the assessment year to 4 years:
- 60% additional tax payable if filed after 2 years but within 3 years from the end of the assessment year
- 70% additional tax payable if filed after 3 years but within 4 years from the end of the assessment year
Rationalization of carry forward of losses in case of amalgamation
- Losses in case of amalgamation will be available for carry-forward and set-off in the hands of amalgamated company only for the residuary period instead of current 8 years. Applicable for amalgamations becoming effective on or after 1 April 2025
Presentive taxation for non-residents who providing services for electronics manufacturing facility
- New presumptive taxation regime proposed deeming 25% of gross
receipts as taxable income (effective tax rate less than 10% of
gross receipts) for non-residents providing services or technology
to
- a resident company establishing or operating an electronics manufacturing facility or
- a connected facility for manufacturing or producing electronic
goods under a notified scheme
(effective from financial year 2025-26)
Harmonisation of Significant Economic Presence applicability with Business Connection
- Non-resident not to constitute a 'significant economic
presence' in India if its operations are confined to the
purchase of goods in India for the purpose of export
(effective from financial year 2025-26)
Rationalisation of tax withholding (TDS) and tax collection (TCS) provisions (effective from 1 April 2025)
- No requirement to collect TCS on sale of goods
- No requirement to collect TCS on LRS remittance by way of loan from financial institutions for education
- No requirement to deduct or collect tax at higher rate where deductees have not filed tax returns
- Delay in deposit of TCS collected till the date of filing TCS statement is de-criminalised. In the last budget, similar provision was introduced with respect to TDS
- No changes in the TDS rates, however, changes are done in the threshold limits
Incentives to IFSC
- Extension of sunset date of commencement of operations to 31 March 2030, for several tax incentive available to IFSC units being in aircraft leasing, ship leasing, investment division of IBU and relocation of fund
- In case of listed overseas group, relaxation from deemed dividend granted for any loan or advance between two group entities, one being a Finance Company or Unit in IFSC set-up as Global / Regional Treasury Centre
- Incentives on capital gains and dividend exemptions available to aircraft leasing is extended to ship leasing units in IFSC
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