Government to Introduce Presumptive Taxation Scheme for Foreign Semiconductor Firms in Budget 2025

The Indian government is set to introduce a new presumptive taxation scheme for foreign semiconductor firms in the upcoming Budget 2025. This move is aimed at simplifying compliance, attracting global companies, and strengthening India’s semiconductor manufacturing ecosystem.

Under the proposed scheme, foreign semiconductor companies will be able to calculate their taxable income as a fixed percentage of turnover, bypassing the need for detailed accounting. This calculated income will then be subject to a corporate income tax rate of 35 percent, making tax assessments more straightforward and predictable.

The Ministry of Electronics and Information Technology (MeitY) played a crucial role in proposing this amendment, with the goal of facilitating foreign firms in establishing labs and manufacturing units in India. The new regime is expected to attract international players, boost domestic manufacturing, and promote the transfer of global best practices.

Prime Minister Narendra Modi has emphasized the importance of domestic semiconductor production, highlighting India’s potential to address both domestic and global challenges in the semiconductor industry. This amendment is part of a broader strategy to reduce India’s reliance on imports and meet the growing demand for semiconductors in sectors like consumer electronics, electric vehicles, and telecommunications.

By simplifying taxation and offering financial incentives, the government aims to secure India’s position in the global semiconductor value chain while meeting the country’s domestic needs. This initiative is a significant step towards making India a global semiconductor hub and driving innovation in the industry.