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: list of goods taxed at 4% :: VAT RATES :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: VAT Audit :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: TDS :: due date for vat payment :: cpt :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd
« General »
 Number of companies paying tax over Rs 100 crore declines in 2013-14
 Tax and the dilemma of the self-employed
 Banks warn share tax hike threatens Paris' post-Brexit appeal
 PMC may decide on property tax rebate for IT firms this week
 I-T Dept is giving out certificates of appreciation. Have you received yours?
 Government works on ironing out benefits refund mechanism for exportersa
  Tax officials are using an IDS provision to question transactions beyond six-year-limit
 Tax-free bonds rally like midcap funds
 Senior citizens do not have to pay advance tax on salary and interest income
 GST: Audit commissioners to get adjudication powers
 Interest on NRE rupee account can be exempt from tax under FEMA

Glass half-full or half-empty?
September, 06th 2010

The government tabled the Direct Taxes Code, 2010, in Parliament last Monday. This revised code takes over from the 'revised discussion paper' released last quarter, which reversed the sweeping changes proposed by the original proposals in the 2009 version of the draft Direct Taxes Code Bill (original code).

The impact of the revised code on the energy and infrastructure sectors varies with the reference point for comparison. Viewed from the perspective of the original code, the revised code has a host of welcome changes, signalling a climbdown by the government on various contentious issues, which caused considerable debate and anxiety. However, if one compares the revised code with the current legislation, the same provisions do reflect an increase in the tax cost.

The proposed and now repudiated gross asset tax is a perfect example of this glass half-full or half-empty phenomenon. The restoration of the book profit-based minimum alternate tax (MAT) from the proposed asset-based levy would come as a material relief, especially to the asset-intensive energy and infrastructure sectors. At the same time, the increase in the MAT rate to 20%, effectively two-thirds of the regular tax rate, has come as a bit of a nasty surprise.

Again, on tax holidays, the revised code provides significant relief in the form of a virtual status quo for existing projects, which currently enjoy a profit-based tax holiday. This provides fiscal stability to investment decisions made in the past, a feature of any sound fiscal policy.

The tax holiday benefit for new projects, however, would be diluted with the replacement of the profit-based incentive with the investment-linked incentive. While the investment-linked incentive would be fiscally beneficial to investors in the first three-to-five years on account of accelerated deductions, it would be economically evened out as lower deductions in the future, except for, of course the timing benefit associated with accelerated deductions.

The industry would need to factor in the diluted effect of the fiscal incentives when bidding for new projects, potentially increasing the tariff/costs for consumers of infrastructure services such as ports, roads, power and the like.

The proposals to drop the earlier provision of ring-fencing of tax losses, continuation of the site restoration benefits for the energy sector and reduction in the effective corporate tax rate (compared to the current rate) are some of the other positives for the industry.

Energy and infrastructure sectors require significant capital outlays in the coming decades, with enhanced private-sector participation the absence of the fiscal incentives will need to be replaced with improved user tariffs and regulatory framework to bring in investments.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Bath SEO Company Birmingham SEO Company Bradford SEO Company Brighton and Hove SEO Company Bristol SEO Company Cambridge SEO Company Canterbury SEO Company Carlisle SEO Company Chester SEO Company Chichester SEO Company Coventry SEO Compan

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