The examples and perspective export incentives in india pdf this article deal primarily with the United States and do not represent a worldwide view of the subject. A tax incentive is an aspect of a country’s tax code designed to incentivize or encourage a particular economic activity. Tax incentives can have both, positive and negative impacts. Among the positive benefits, if implemented and designed properly, tax incentives can attract investments.
Other benefits include increased employment, higher number of capital transfers, research and technology development, and improvement to less developed areas. The first simply refers to lost government tax revenue resulting from the tax incentive. The second cost refers to the situation when the tax incentives lead to too much investment in a certain area of the economy and too little investment in other areas of the economy. Many “tax incentives” simply remove part or all the burden of the tax from whatever market transaction is taking place. That is because almost all taxes impose what economists call an excess burden or a deadweight loss.
For example, if savings are taxed, people save less than they otherwise would. If non-essential goods are taxed, people buy less. If wages are taxed, people work less. Finally, if activities like entertainment and travel are taxed, consumption is rexucedy. Sometimes, the goal is to reduce such market activity, as in the case of taxing cigarettes.
However, reducing activity is most often not a goal because greater market activity is considered to be desirable. When a tax incentive is spoken of, it usually means removing all or some tax and thus reduce its burden. Regardless of the fact that an incentive spurs economic activity, many use the term to refer to any relative change in taxation that changes economic behavior. Such pseudo-incentives include tax holidays, tax deductions, or tax abatement. Such “tax incentives” are targeted at both individuals and corporations. Individual tax incentives are a prominent form of incentive and include deductions, exemptions, and credits.
Specific examples include the mortgage interest deduction, individual retirement account, and hybrid tax credit. Another form of an individual tax incentive is the income tax incentive. Though mostly used in transitioning and developing countries, usually correlating with insufficient domestic capita, the income tax incentive is meant to help the economic welfare of direct investors and corresponds with investing in production activities and finally, many times is meant to attract foreign investors. These incentives are introduced for various reasons.
Firstly, they are seen to counter balance investment disincentives stemming from the normal tax system. Others use the incentives to equalize disadvantages to investing such as complicated laws and insufficient infrastructure. Corporate tax incentives can be raised at federal, state, and local government levels. 109 billion in 2011, according to a Tax Foundation Study. Corporate tax incentives provided by state and local governments are also included in the US tax code but are very often directed at individual companies involved in a corporate site selection project.
Not all tax incentives are structured for individuals or corporations, as some tax incentives are meant to help the welfare of the society. For example, the historical preservation tax incentive. The US federal government pushes, in many situations, to preserve historical buildings. One way the government does so is through tax incentives for the rehabilitation of historic buildings. Boeing’s historic tax break from state even bigger than thought”. Pennsylvania tax incentive plan played major role in luring Shell cracker plant”. Location and tax breaks key to Shell’s Pennsylvania cracker plant approval”.
This page was last edited on 7 April 2018, at 06:02. This article relies largely or entirely on a single source. Relevant discussion may be found on the talk page. STPI maintains internal engineering resources to provide consulting, training and implementation services. Services cover network design, system integration, installation, operations and maintenance of application networks and facilities in varied areas. It is an export oriented scheme for the development and export of computer software, including export of professional services. STPI has played a seminal role in India having earned a reputation as an information technology superpower.
STP units exported software and information technology worth Rs. Besides regulating the STP scheme, STPI centers also provide a variety of services including high-speed data communication, incubation facilities, consultancy, network monitoring, data centers and data hosting. STPI provides physical hosting for the National Internet Exchange of India. The tax benefits under the Income Tax Act Section 10A applicable to STP units has expired since March 2011. While the Government has chosen not to extend the Sec 10A benefits against the demand by the IT units, most of the STP registered SME units will be affected, and now will have to pay income tax on profits earned from exports. A new incentive scheme for IT and ITES companies is under discussion.