Industry Specific Tax Strategies🏭
Must Have Guide
Could the key to turbocharging your company’s growth be hiding in your tax returns ?With the right strategic planning, tax incentives could unlock major savings to invest across R&D, talent acquisition, capital upgrades, and expansion initiatives.
In this edition of the JJ Tax newsletter, we reveal targeted tax-planning advice for businesses across manufacturing, IT, pharma, banking and more. Read on to discover actionable tips tailored to your industry – and go from tax headache to fuel for your future successes.
Whether you need help navigating incentives for patented innovations, properly benchmarking transfer pricing policies, or accelerating machinery depreciation...we’ve done the homework so you can keep your focus on what matters most.
Join thousands of leading Indian companies who have added a specialized tax advisor to their strategic planning team. Because in today’s complex regulatory environment, the companies who succeed don’t just respond to change – they leverage it fully to their advantage.🌐💼
Strategic Tax Planning by Sector
1) Manufacturing & Engineering
With complex supply chains and capital-intensive operations, manufacturers require careful tax planning:
Claim deductions on raw material and component imports
Accelerate depreciation on machinery and factory assets
Structure operations to maximize SEZ incentives
Zero-rate GST on exports while claiming input credits
The government has introduced a favourable tax regime for new manufacturing companies. The Taxation Laws (Amendment) Ordinance, 2019 passed on 20 September 2019 has inserted Section 115BAB offering a low tax rate of 15% (plus surcharge and cess) to new manufacturing companies.💡🏭
2) Pharmaceuticals &Healthcare
Managing R&D costs and regulatory compliance is critical in the pharma sector:
Rigorously track R&D expenses for 100200% tax deduction
Patent innovations to avail exclusive 10-year tax holidays
Benchmark transfer pricing policies for overseas transactions
Carefully calculate discounts, bonuses & write-offs of expired drugs
A Mumbai-based pharmaceuticals company, a leading drug manufacturer, was spending heavily on R&D for a new patented drug formulation. While the scientific team focused on research, the company engaged JJ Tax to maximize tax incentives on these innovation investments.🧪💊
Our advisors worked closely with them across 3 key initiatives:
● Rigorous Tracking of R&D Spends:
First, we helped them set up processes to capture comprehensive data on R&D expenditures. Beyond just scientific team costs, this included technical service fees, clinical trial expenses, regulatory fees, equipment, and more.
● Patent Application Consulting:
Working alongside their legal team, we ensured the drafting and submission of water-tight patents for the new drug formulation. This set the stage for significant tax holidays down the road.
Preparing and Filing for Tax Deductions:
Finally, leveraging the collated data and patents, our advisors prepared the R&D tax exemption applications - highlighting expenses for the 100% deduction and outlining the basis for the 10-year tax holiday.
3) Information Technology
With frequent technology upgrades and high employee costs, IT firms should leverage:
Accelerated depreciation on hardware and servers
Claim capital and revenue expenditures related to software development
Tax exemptions if operating out of special economic zone
4) Banking, Financial Services & Insurance
As key drivers of economic growth, the BFSI sector enjoys tailored incentives:
Tax holidays for new insurance companies
Deductions on loan loss provisions and reserves
Lower tax rates for dividends and capital gains
Cascading tax benefits for investments in specified securities
Let’s Discuss Your Tax Planning
We hope you’ve found this edition beneficial in highlighting key focus areas for your company. Tax incentives and credits change frequently based on government priorities – so a continuous assessment is needed to leverage the most upside.
To develop a customized tax strategy aligned with your operations and strategic goals, please contact our advisors on the JJ Tax app.
Stay tax savvy, stay ahead!