Budget 2014: 15% investment allowance to enthuse auto makers

The Union Budget 2014-15 may not have any ground breaking measures to enthuse the auto industry in general but a proposed investment allowance of 15 per cent for new investments over and above Rs 25 crore will be a welcome announcement by the auto industry.

This means that companies will now be eligible for an additional deduction on income tax by way of investment allowance of 15 per cent, provided there's investment of Rs 25 crore. The key here is that the investment cap has been lowered from the earlier Rs 100 crore to Rs 25 crore in the Union Budget 2014. 

This will give a boost to auto manufacturers as well as component manufacturers looking at expanding operations and is likely to be welcomed by manufacturers for installation of new plants and machinery.

Overall, the investment allowance will help restore industry confidence in fresh investments.