Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: due date for vat payment :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: cpt :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India :: VAT RATES :: ACCOUNTING STANDARD :: TDS :: ACCOUNTING STANDARDS :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT
 
 
« News Headlines »
 All you need to know about claiming tax break on HRA
 How much income tax you should pay on investments in gold?
  Best ways to save tax in 2017
 8 unknown stocks that could yield huge returns
 Government may set threshold for probe into deposits to prevent harassment of taxpayers
 How to calculate capital gains tax
 April 1 still the target for GST: FM
 How to respond to CBDT’s tax compliance notice
 Goods & Services Tax (GST)(As On 01-01-2017)
 Excise, service taxpayers to migrate to GST portal by January 31
 Tax numbers belie slowdown: FM

Removal of double tax on dividends boost to infrastructure sector
March, 04th 2008

The biggest benefit that the latest Budget has conferred on the entire infrastructure sector is the removal of double tax on dividends, says Mr Kuljit Singh, Partner, Ernst & Young.

As infrastructure projects are typically developed through SPVs (special purpose vehicles), removal of double taxation can lead to a saving of at least one level of dividend taxation (in the existing level of 16.995 per cent, including surcharge), he explains in an e-mail interaction with Business Line.

Additionally, at present, a large number of developers are looking to set up holding companies for power, highways, ports and so on. The valuation of all of these holding companies would be positively impacted due to this measure, foresees Mr Kuljit.

Project imports

Another positive from the Budget for infrastructure projects that he mentions is the reduction of duty on project imports from 7.5 per cent to 5 per cent. A key negative, however, is the duty structure on cement, which is expected to push up costs, rues Mr Kuljit.

While the Union Budget for 2008-09 addressed the needs of various infrastructure requirements, including that of social and rural infrastructure, there was not much to offer as tax sops, or for promoting private sector investments, bemoans Mr Vishwas Udgirkar, Executive Director Government Regulation and Infrastructure Development Practice, PricewaterhouseCoopers.

As evident from various reports and documents, the Government is relying on huge investments from the private sector to create infrastructure that can support the overall economic growth, he reasons. It was expected, therefore, that the Budget would address various issues relating to financing of infrastructure.

On that ground, the Budget has little to offer except the proposed change in the treatment of dividend distribution tax (DDT). Mr Vishwas concedes, though, that this could be a significant measure to encourage infrastructure financing, welcome by the industry.

TDS exemption

Another financial measure that he highlights is the exemption of TDS (tax deduction at source) on listed corporate debt instrument, which is expected to help, over the long term, in the development of the debt market.

The Budget, however, has not addressed a number of issues like exempting foreign borrowings by infrastructure companies from withholding tax requirements, providing similar capital gain tax treatments for listed and unlisted equity, treating infrastructure holding companies as a separate class of NBFCs (non-banking financial companies), exempting Section 80IA companies from minimum alternative tax (MAT) and re-introducing Section 10(23G), lists Mr Vishwas.

Power sector

Talking of the power sector, among the infrastructure components, Mr Kuljit also finds it upsetting that the Budget has not mentioned the extension of section 80IA tax benefit for power projects.

Non-extension of this tax benefit will have a negative impact on power projects which are being proposed today, as most of these may not be completed before March 31, 2010, which is the last required date for commissioning under the existing 80IA tax provision of the Income Tax Act, 1961.

The national fund proposed for power transmission and distribution (T&D), if properly structured, can be used to strengthen the T&D network at the state level, suggests Mr Kuljit. Also, the allocation of Rs 5,500 crore for Rajiv Gandhi Grameen Vidyut Yojana will positively impact the state-level networks.

As regards roads and highways, he sees nothing significant in the current Budget, but for an increase of around Rs 2,000 crore being proposed in the NHDP (National Highways Development Project), and an allocation of additional Rs 4,000 crore for rural roads.

In the medium to long term, the cut in excise duty from 16 per cent to 12 per cent for small cars may lead to increase in traffic on roads, thus positively impacting toll roads, he anticipates.

Mr Vishwas is of the view that the focus on nationwide monitoring of all important programmes is a welcome step, but cautions that such monitoring systems have to be put in place quickly.

What about aviation? Despite the fact that airlines (in particular, low-cost airlines) are now increasingly serving the masses, aviation is still perceived as the preserve of the rich and hence the tax policies are structured accordingly, laments Mr Kuljit.

The industry was keenly expecting reduction in sales tax (from the 20 to 30 per cent levels to around 4 per cent) on ATF (aviation turbine fuel) and changes in tax on lease rentals, he reminds. However, none of these expectations has been accepted in the Budget, which means that the airline industrys rough patch may continue.

D. Murali

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions