The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged Finance Minister to exempt `Infrastructural Projects’ in Power, Roads, Ports, Oil & Gas and irrigation from levy of Excise, Value Added Tax (VAT) and Central Sales Tax (CST) until such projects are commissioned.
On account of continuing incidence of excise, VAT and CST on such projects, their capital costs of such projects become dearer by over 20-25% which put huge burden on those that are responsible for commissioning infrastructural projects, said ASSOCHAM President, Sajjan Jindal.
In its Pre-Budget Wish List on Infrastructure Sector, submitted to Pranab Mukherjee, by Jindal, it has also been pointed out that the incidence of 10% service tax imposed on such projects during their implementation phase needs to be discontinued since infrastructure is a priority area for the government.
According to ASSOCHAM, burden of service tax, excise, VAT and CST on all infrastructural projects question their bankability as developers do not get easy access to liquidity as a result delay occurs in their commissioning.
Jindal has further stated that interest exemptions for infrastructure bonds or the like should be considered, alongwith incentives for making such investments (such as, an additional deduction of Rs. 1 lakh under section 80C) by making it total at Rs 2 Lakh.
The Chamber has further suggested that the infrastructure facility should be defined under the service tax provisions and service tax exemption also be extended to infrastructure facilities such as power, port, water sewerage projects, irrigation projects, waste treatment plants, water treatment plants and drainage systems.
It has further sought extension of 10 years tax holiday for the cold chain establishments in respect of the profits of the undertaking and the assessee given the option to claim this tax holiday for any 10 consecutive years out of 15 years beginning with the year in which undertaking commences businesses or commercial operations.
Infrastructure would require substantial investment by public sector where the gestation period of a project is much longer such as roads and rural infrastructure or where private sector investment is unlikely at this stage like irrigation projects. Significant financial resources can be mobilized by the government for such investment in public sector infrastructure projects or in industrial projects though partial dis-investment of shares in the existing public sector companies, without losing their management control.
Source: ASSOCHAM
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