Abolition of MAT during tax holiday period:Infrastructure company avail tax holiday benefit under 80-IA. Given long gestation and criticality of infrastructure, they are given a 10 year tax holiday. However, it is basically an exemption from paying income tax on the profits and paying MAT on book profits. So, whatever the projects are supposed to have conserved through the 80-IA benefits are being taken away by the MAT levy. MAT currently is as high as 20 per cent. The gap between Corporate Tax and MAT on a year-on-year basis is reducing. A bulk of what is the tax benefit that an infrastructure projects would have got is being taken away by MAT.
Govt should do away with MAT for infrastructure projects, so that the complete benefits of 80-IA is made available to infrastructure projects.
Road map for GST: Road projects often cross two or more states. This means, there are multiple state tax authorities and compliances. Each state has its own regulation and lack uniformity. A uniform GST structure across states will give companies increased ease in operation. It is hoped that GST roadmap and clarity on migration to the new tax structure will be part of the FM's budget speech.
Further ECB easing: Infrastructure sector presently is facing dearth of funds. Further relaxation of ECB norms for infrastructure companies is needed, specially for refinancing existing rupee debt to long term foreign debt.
National investment board: The major reason for infrastructure to have lost its charm among investment community is due to delay in project implementation due to issues in numerous clearances. Getting the project off the ground within a reasonable time is a major challenge faced by the infrastructure industry today.
A successful launch of the NIB/Cabinet Committee on Investments headed by the Prime Minister which is planned to set up to ensure fast track project clearances and their timely implementation may hopefully ease the problem. Clarity in its roles, powers and functions will help in creating a climate of confidence.
Fiscal responsibility & improvement of investment sentiment: Recent policy measures have helped create positive vibes towards India in the global investment community. Budget has to take that momentum ahead and show government commitment to fiscal discipline. Sustained reforms and good implementation of policies is imperative as currently lack of equity options is hampering the huge investment target of $1 trillion in the current Five Year Plan.
Leave a Reply
You must be logged in to post a comment.