Industry awaits Union Budget 2009
We would like Construction Industry to be given an infrastructure status. The benefits under section 80IA of Income Tax Act may be reintroduced to the construction firms covering all the companies involved in the development of infrastructure projects.
Construction companies are subjected to TDS provisions apparently with a view to cover small contracting firms. We recommend that Corporate bodies with equity capital of more than Rs.5 Crores and turnover in excess of Rs.500 Crores to be exempted from the provisions of section 194C.
Equipments imported by contractors to be fully exempt from customs duty as most of the equipments are put to use in the nation building. For execution of civil works contract abroad, the contractor is required to import capital goods from third country into project country. Also, he pays customs duty on the import of capital goods as per the laws of the project country, which is almost nil. But after completion of the project, when he imports these capital goods into India, he is required to pay customs duty on them at full rate of duty (around 50%) on depreciated assessable value.
We suggest that if the contractor has executed the construction work contract abroad of value 5 times the CIF value of the capital goods purchased abroad from third country, then he should be entitled to pay only 5% customs duty and not full rate of duty which is around 50% . The above concession as well as concession under EPCG scheme Is to be extended to second-hand capital goods also.
Excise duty on pre casting activity has to be carried at project site is not by way of choice but a matter of warrant based on technical features and various projects constrains eg. Flyovers, Bridges & Tunnels, infrastructure projects. Excise Duty exemption for such specific activity as hitherto 28/02/2006 to be restored in larger interest of project cost and expeditious execution.
We request total rationalization of VAT. Every State has different schedule/ procedure/ rates. Even assessment pattern changes monthly/ quarterly / yearly. System of compounding method also are different. Though we say that it is a uniform tax across the country as a prelude to GST, in reality it is not so. Hence it would be better to have comprehensive guideline uniformly implemented across the country with one central agency administering it and State can be given their share of revenue.
K Subrahmanian, MD and S Paramasivan, ED – finance & commercial, Afcons Infrastructure Ltd
Provide fiscal incentives for encouraging ‘Affordable Mass Housing’ in 300 – 600 sq.ft and up to 1000 sq.ft by providing subsidy in interest payable by home buyer.Give exemption of direct and indirect taxes to boost ‘Slum Redevelopment’ initiative.
We should expect that enough resources will be allocated to infrastructure because of competing demand in high deficit environment. We hope that infrastructure sector will be given its due consideration in the forthcoming budget. Moreover, infrastructure service providers should be given additional attention so that it could help in creating domestic capacities to implement projects.
Amitabh Das Mundhra, Director, Simplex Infrastructures Ltd
All said and done, the Government is already on the right track by considering the hiking of income-tax exemption available for interest payment on home loans to Rs. 2.5 lakh a year. However, there are still a number of blanks to be filled –
Make high-priority provisions for the laying down of necessary infrastructure so that new areas can be opened up. The concept would be to create and link up satellite settlements to main cities that will help tackle the demand-supply mismatch.
Provide clarity on the STPI guidelines whether they will remain or not, or whether they have changed.
Offer clarity on the introduction of a real estate regulator, since the fact that India is now a member of the global village makes higher levels for transparency imperative. This regulator may not necessarily decide on rates, but should put down firm principles in terms of property dealings and also quality parameters in terms of rating of constructions.
Anuj Puri – Chairman & Country Head, Jones Lang LaSalle Meghraj
The budget must set up a direction on reforms. Infrastructure ought to be a major focus area of the budget, not just towards increasing the competitiveness the export sector, but also because it will give a much needed impetus to the flagging economy while also filling the large gap in infrastructure in the country.
Given that the fiscal deficit is already at a high level, it would be challenging for the government to apportion more funds in this direction. Therefore, the budget must gear towards evolving a constructive and stable policy environment aimed towards attracting private participation in infrastructure projects.
Given the high fiscal deficit, and the pressure on government revenues, it seems improbable that any major tax cuts will be announced. However, broader initiatives that are more development oriented and bring about reforms in the larger economy can certainly be tackled.
Kaushal Sampat, COO, Dun & Bradstreet India
The Railways came out with certain projects to set up factories to manufacture various rolling stocks, components and coaches. All of the projects were withdrawn from the PPP after advanced discussions. A mandate should be in place to govern any policy. There needs to be a clear and long term guideline so that companies can plan accordingly.
The Eastern and western corridor should be put on fast track before bidders start to loose interest and focus elsewhere. The consultancy study for other Dedicated Freight Corridor projects on golden quadrangle need to be pushed.
Rajeev Jyoti, president & MD, Bombardier Transportation India and Chairman of Confederation of Indian Industry (CII) Railway Equipment Division
The upcoming budget should have an increase in infrastructure spending and fast tracking of certain projects in power and roads sector to bring India at par with other BRIC countries. It should reflect rationalization of interstate taxes and proper roadmap to ensure implementation of GST by April 2010. Land acquisition norms for sanctioned mega projects to be made transparent and fair to ensure that projects do not get strangulated at birth itself or become unviable by the time complete land acquisition has been done.
Tushar Mehendale, Managing Director, ElectroMech
Currently, VAT is 12.5% and excise duty is 8% plus there are taxes on import of Gypsum and Coal. The total tax levy comes to 21% which we would like to be reduced to 11% as whole. Since, cement is a bulk commodity with a high distribution cost, we also seek an abatement of at least 35-60 per cent in excise duty on Cement from the government. These Benefits will be passed on to the consumers and help to kick start the low-cost housing projects and give boost to more infrastructure development. We want the government to allocate more funds for Infrastructure development like highways, roads, ports, bridges and airports etc. The interest rate on housing loan should be reduced to 8% to boost the housing sector.
Vinod Juneja, Managing Director, Braj Binani Group
As real estate is slated to be a propeller for other industries, it is important to give sufficient sops to revive this sector. The revival of real estate sector can only happen once the consumer confidence and interest in realty is restored. Investments and consumer interest that have taken a back seat in the past few months need to be turned around and as a first step towards this; banks need to be advised to reduce the interest rates on housing loans by at least 1%. Also, the government should take steps for the regularization and licensing of Real Estate professionals to build transparency and promote professionalism.
Samir Chopra, CMD, RE/MAX India
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. Definition of Section 80 1A of Income Tax Act should be revised so as to provide a fillip to government’s Bharat Nirman Programme towards upgrading rural infrastructure covering roads, irrigation, drinking water, electricity, housing and telecom.
Permit Pension Funds to invest 10-15% of their funds in Infrastructure projects and also sought that refinancing of existing rupee loans through External Commercial Borrowings (ECBs) be allowed for such projects from 2009-10. In addition, the Federation has also demanded that Special Purpose Vehicles (SPVs) should be treated as `deemed listed companies’ and developer/investor be entitled to reduced capital gains tax, if they stay invested for required number of years as per provisions of Income-tax Act.
Construction Federation of India