The Indian Space Association ( ISPA ) is spearheading an appeal for substantial fiscal initiatives in the impending Union Budget for 2024-25, aiming to bolster the financial foundation of the space industry. The Budget will be presented by the Union Finance Minister Nirmala Sitharaman on 1st February 2024.
At the forefront of ISPA’s recommendations is the extension of Goods and Services Tax (GST) exemption to satellite companies and ground equipment manufacturing. The association is also pressing for a concurrent exemption on the procurement of vital inputs, coupled with the implementation of tax holidays and exemptions tailored for entities operating within the space sector.
ISPA, headquartered in Delhi, underscored the significance of concessions on customs duties, particularly for specified imports such as satellites and launch vehicles.
In addition to the fiscal demands, ISPA emphasised the critical necessity for clarity in the foreign direct investment (FDI) policy governing the space sector. The association proposed the introduction of a Production Linked Incentive (PLI) scheme specifically tailored for space-grade components, envisioning a boost in manufacturing capabilities within the sector.
Among the financial recommendations put forth by ISPA is a call for a reduction in the tax rate to 5% on external commercial borrowings, accompanied by a provision for a capital subsidy on infrastructure investments. Lt. Gen. AK Bhatt, the Director General of ISPA, underscored the critical need for a comprehensive regulatory framework to address existing fiscal and taxation challenges, asserting that such a framework is indispensable for fostering development and innovation within the space industry, reported ET now.
Bhatt advocates for the government’s careful consideration of these recommendations, emphasising that by leveraging the momentum provided by visionary government policies, private space enterprises can significantly contribute to the nation’s socio-economic development. ISPA expresses optimism that the Union Budget for 2024-25 will echo these considerations, creating an environment conducive to the flourishing of the Indian space industry.
What is a Tax Holiday
A tax holiday is a brief duration wherein particular taxes or specific tax categories undergo either a reduction or complete suspension. Governments frequently deploy tax holidays as a strategic tool to promote economic activities, enhance investments, and spur growth in specific sectors or industries. The primary goal is to entice businesses, investors, and entrepreneurs, offering them a financial incentive through diminished tax obligations for a specified period.
It may be implemented across different tax categories, such as income tax, corporate tax, or specific taxes associated with particular activities or sectors. The timeframe for a tax holiday is usually determined by the government or the relevant tax authorities. Throughout this duration, qualifying entities or individuals have the opportunity to benefit from exemptions, deductions, or lowered tax rates, creating a favourable environment for economic development and increased investment.
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