Industry body Assocham on Wednesday recommended a weighted tax deduction of 150-200 per cent on actual cost of specified components for the consumer electronics sector in the upcoming Union Budget.
The deduction is required as costs pertaining to finance, energy and logistics/transportation constitute a major portion of consumer electronics sector, the chamber said in a release.
"Further, these costs are auditable and duly included in the financial statements of a company," the release said quoting the recommendations on direct tax made by the body to the centre.
With a view to revive private investments in the electronics sector, Assocham has suggested that venture capital pool may be introduced in the sector and coordinated by a bank/special purpose vehicle or under public-private partnership mode, according to the release.
"In order to boost the availability of capital funds to India's $100 billion worth electronics industry, it is imperative that a venture capital pool be created and allied tax incentive provided to enable genuine private players to use funds of such pool through a stringent mechanism," said D.S. Rawat, Secretary General, Assocham.
Contributors may be offered tax incentives on the dividend, while manufacturers may be provided with tax exemptions, it said.
To make the business more competitive in the electronics sector, Assocham has recommended the government to link the India BPO Promotion Scheme with direct tax benefit.