BUDGET WISHLIST: Infrastructure

CEOSPEAK: Jeh Wadia, Managing Director, GoAir

"The government's action towards reducing the existing sales tax on fuel (average is 27 per cent to 30 per cent) to a 4 per cent declared goods tax will go a long way in fuelling future growth of the aviation sector and make low fare models more profitable in India, enabling them to offer even lower fares than what they are offering at present"

Chamber-Speak

CII
A Centre for Excellence to develop five model projects, in collaboration with state governments under PPP to create demonstration effects, should be instituted. Dr R H Patil and Dr Deepak Parekh Committee recommendations on creating long-term corporate debt markets should be implemented. Pension funds to invest in infrastructure should be allowed. External commercial borrowings (ECB) in excess of the ceiling of $20 million should be allowed for funding rupee expenditure on infrastructure projects

FICCI
Investment in key infrastructure areas like power, roads and ports should be zero-rated for tax purposes. Service tax should not be levied on services used in building infrastructure like roads, ports, mining and railway infrastructure. Tax can be levied only when infrastructure is used for providing any taxable service

STATE OF PLAY

Amrit Pandurangi, Leader Infrastructure Practice, PricewaterhouseCoopers

Finance Act 2007 amended Section 80IA of the I-T Act restricting the deduction to amalgamated or resulting company and by providing that sub-section (12) shall not apply to any undertaking or enterprise which is transferred in a scheme of amalgamation or demerger on or after April 1, 2007. This amendment should be omitted as nowadays mergers constitute a healthy trend for consolidation and growth of inter-alia, the infrastructure industry, and this amendment could prove to be a major setback for this industry.

Long-term capital gains are exempt (u/s 54EC of the I-T Act), if such gains are invested within stipulated period in specified bonds of the NHAI and Rural Electrification Corporation Ltd. Finance Act, 2007, restricted such investment to Rs 50 lakh per investor per year. To augment infrastructural financial needs, limit of Rs 50 lakh be increased or withdrawn.

To provide further funds for infrastructure industry, deduction under section 80C of the I-T Act, currently capped at Rs 1 lakh, be increased to Rs 2 lakh, with stipulation of investing the additional Rs 1 lakh only in shares or debentures of infrastructure companies.

Benefits under project imports are mainly targeted at infrastructural projects. The Basic Customs Duty (BCD) rate under Project import benefits be lowered from 7.5 per cent to 5 per cent, as presently most capital goods imported in regular manner are also charged BCD at 7.5 per cent. This will make import of latest technology and capital goods cheaper.

Project import benefits are currently restricted to select railway projects. To ensure modernisation needs of infrastructure get an effective thrust, all Railway modernisation or renovation projects be included.

Road development projects undertaken by the NHAI should be totally exempt from Customs duty. This will enable companies undertaking projects with the NHAI, to import better capital goods and latest technology for construction of better roads.

All input services consumed in infrastructure projects should be exempt from service tax. This will help in reducing the overall burden of the input cost for these projects and will make their effective use cheaper to the industry.