Industry Expectations - Budget 2009 - 2010
Budget expectation for the Construction and Infrastructure Industry
from Mr K Subrahmanian, Managing Director and Mr S. Paramasivan (Executive Director-Finance and Commercial), AFCONS INFRASTRUCTURE Ltd.
 While there are several issues confronting the Construction Industry, in this article we focus on issues, which probably can be addressed in the budget.
We highlight the issues below:-
1) 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.
2) 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.
3) Equipments imported by contractors to be fully exempt from customs duty as most of the equipments are put to use in the nation building.
4) 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.
5. 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.
6. 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. |
Union Budget