Manufacture of railway locomotives and rolling stock

Manufacturing of railway locomotives is classified as 'Manufacturing of goods or materials'. Forensic audit focus is on the 'Substantial Transformation' test; mere assembly of imported components (SKD/CKD) may be challenged if local value-add does not meet the threshold defined in the 2025 executive regulations.

Audit Red Flag

Embedded service contracts or leasing arrangements for rolling stock being misclassified as manufacturing income to avoid Excluded Activity treatment.

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