Girish Mistry & Harsha Rawa/ DNA MONEY

The composite index of the six infrastructure industries during April-May 2007-08 had increased at 8.1 per cent compared with 7.2 per cent during the same period the previous fiscal and it is imperative for the current budget to ensure that this momentum is not lost. For this, specific policies in this area are needed to make infrastructure attractive and to bridge the large gap between potential demand and available supply. Some of the key tax measures that could spur efficient and sophisticated investments in infrastructure are set out below.

Direct incentives Most infrastructure investments are capital intensive and have long gestation periods. Although enterprises engaged in infrastructure development are eligible for tax exemptions under Section 80-IA, they are liable to pay minimum alternate tax (MAT). Exemption from MAT is sought to enable these companies to avail complete tax relief.

Currently the benefit of venture capital undertaking (VCU) status u/s 10(23FB) is accorded to infrastructure business relating to development and maintenance of ports, airports, roads and projects relating to water supply, sewage treatment, sanitation, etc.

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Posted by dcjaya at February 23, 2008 2:38 PM