Companies

SAIL looks to hiving off manufacturing units to take advantage of new tax rates

Our Bureau New Delhi | Updated on September 23, 2019 Published on September 23, 2019

Anil Kumar Chaudhary, Chairman, Steel Authority of India   -  File photo

Steel Authority of India Ltd (SAIL) is looking at means to lower its overall tax incidence by hiving in-house manufacturing and project expansions into separate companies.

“Industry has to take full advantage of the fiscal measures. The government has come out with quite a few measures and one very important measure is that new manufacturing companies are going to pay corporate tax at the rate of 15 per cent. Steel industry should take full advantage of this while keeping within the legal framework,” SAIL Chairman, Anil Kumar Chaudhary said at the Chintan Shivir organised by Federation of Indian Chambers of Commerce and Industry (FICCI) and the Ministry of Steel.

Earlier this month, Finance Minister Nirmala Sitharaman announced a slew of tax measures including reducing the effective tax rate for domestic companies to 25.17, provided they do not take any incentives. For new manufacturing firms, the effective tax rate will be 17.01 per cent inclusive of surcharge and cess.

“We have to see whether we can offload some of our upstream and downstream production to a new company by forming it. This is going to be effective October 1, 2019. If we are able to offload some of our work like rolling, we can offload (them) to some of the new companies and likewise when we look at the upstream manufacturing, it can be offloaded,” Chaudhary said.

“If we are having a maintenance company, we can go in for production of spares, refractors, consumables there. And also in the case of equipment manufacturing, if being currently manufactured within a company, we can go and form a new company. There is nothing illegal in this. The only thing you are doing is taking advantage of some dispensation given by the government for producers,” he added.

Published on September 23, 2019
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