CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Tax Breaks Urged For Indian Infrastructure Companies

Tax Breaks Urged For Indian Infrastructure Companies

by Mary Swire, Tax-News.com, Hong Kong

24 February 2011


Leading Indian trade body the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has called for tax exemptions for infrastructure capital companies and funds as the sector’s development has been identified as a growth area by the government.

At the same time, it said, housing, power, water supply, sewerage, oil production and pipelines as well as mines should be given the status of infrastructure projects by service tax authorities.

ASSOCHAM said in a pre-budget statement:

“Section 10 (23G) of the Income Tax Act 1961 which was there till assessment year 2006-07 provided for exemption of interest and long-term capital gains for infrastructure capital companies and funds for various projects like housing and development of special economic zones. This provision was knocked down by the Finance Act 2006."

“This is in view of the fact that major infrastructure projects executed by special purpose vehicles (SPVs) floated by companies and transfer of shares will not qualify for tax exemption in the absence of a provision similar to section 10 (23G) as the SPVs will not be listed on stock exchanges."

“In the earlier section 115JA of the Act, profits derived by industrial undertakings engaged in the business of generation and distribution of power and those developing, maintaining and operating any infrastructure facility qualifying for tax holiday under section 801A were deductible from book profits computed for minimum alternate tax (MAT) purposes. The deductibility was withdrawn under the provisions of section 115JB which was introduced in 2001-02."

ASSOCHAM has suggested restoration of the earlier provision to give a fillip to these sectors. It adds that while these projects are given the status of infrastructure by the Income Tax Department and the Reserve Bank of India, and accorded favourable tax status under the Income Tax Act, service tax authorities do not recognize them as infrastructure projects. It claims that only two services, works contracts and commercial and industrial construction, are exempted from service tax in relation to roads, airports, railways, transport terminals, bridges, tunnels, dams, major and other ports.

TAGS: tax | business | India | budget | tax breaks | construction

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »