Govt may widen infra ambit to open up sops
NEW DELHI: In a bid to give a boost to the economy and the pandemic hit businesses, Centre is expected to widen the ambit of infrastructure projects to bring in more projects under the segment and allow these segments to avail sops and incentives.
Two people with knowledge of the developments said that several sectors which are mentioned in the harmonised master list of infrastructure sub-sectors notified by finance ministry may also come under the definition of infrastructure facility under Section 35AD of the Income Tax Act and avail deduction on direct tax.
They said that the proposal may form part of the budget announcements for FY 20222023. Queries sent t o t he finance ministry, however, remained unanswered till press time. Under Section 35AD, an assessee is allowed a deduction in respect of the whole of the capital expenditure, wholly and exclusively, for the purposes of any specified business involving building and maintaining an infrastructure facility.
The section applies ‘specified businesses’ to including laying and operating of cross-country natural gas pipeline network for distribution, including storage facilities being an integral part of such network, building and operating a new hospital with at least one hundred beds for patients and developing and building an affordable housing project, among others. It is also applicable to two-star hotels and above categories.
On the other hand, the harmonised master list of infrastructure sub-sectors, is meant to guide all agencies responsible for supporting infrastructure.
The master list includes roads, highways, railways, power generation, transmission and distribution, solid waste management, sewage treatment, telecom, three start hotels and above located outside cities with a population of more than 10 lakh, special ecomonic zones among others. In April last year, exhibition-cum-convention centre was included in the list of infrastructure sub-sectors under the category of social and commercial infrastructure.
Industry bodies have been seeking a total uniformity of the lists of infrastructure facilities or projects under Section 35AD and the master list. However, officials said that it is unlikely that the government will bring all the projects which are in the master list under the ambit of Sector 35AD but several sectors are being considered.
Sectors given the infrastructure status are generally included in the harmonised master list for infrastructure sub-sectors, however, not all of these sub sectors can avail benefits of Section 35AD. The section gains significance given the tax deduction allowed on the firm’s expenditure.
According to industry body ASSOCHAM development of infrastructure facility requires huge investment and the provision of deduction only for certain infrastructure facility would cause undue hardship on the other infrastructure projects.