(MENAFN- KNN India)
New Delhi, Dec 27 (KNN)
The government is poised to amend the Income Tax Act in Budget 2025, introducing a presumptive taxation scheme under Section 44 for foreign Semiconductor firms.
The move aims to simplify compliance, attract global companies, and bolster India's semiconductor manufacturing ecosystem, a senior official revealed.
The proposed scheme will allow foreign semiconductor companies to compute taxable income as a fixed percentage of turnover, bypassing detailed accounting.
The corporate income tax rate of 35 percent will then be applied to this calculated income, making tax assessments straightforward and predictable.
“This is a simplified taxation system. Once implemented, their expenditure becomes immaterial-they pay tax on turnover without the need for extensive assessments,” the official told Moneycontrol on condition of anonymity.
The initiative, aligned with the government's vision of making India a global semiconductor hub, follows similar presumptive tax schemes adopted for sectors like oil and shipping.
For example, the July 2024 Budget extended such measures to cruise ships, which could calculate income as 20 percent of passenger revenue.
The exact turnover percentage for semiconductors will be decided after consultations with industry stakeholders.
The Ministry of Electronics and Information Technology (MeitY) played a key role in proposing the amendment, aiming to facilitate foreign firms in establishing labs and manufacturing units in India.
The new regime is expected to attract international players, drive domestic manufacturing, and foster the transfer of global best practices.
Prime Minister Narendra Modi emphasised the importance of domestic semiconductor production, stating in September,“India's semiconductor ecosystem is a solution not just for India's challenges but also for global challenges.”
This amendment is part of a broader push to reduce India's reliance on imports and address surging demand for semiconductors driven by sectors like consumer electronics, electric vehicles, and telecommunications.
By simplifying taxation and offering financial incentives, the government seeks to secure India's place in the global semiconductor value chain while meeting domestic needs.
(KNN Bureau)
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