Prime Minister-appointed BK Chaturvedi Committee’s second set of recommendations, meant to boost the highways construction sector, may not be able to relax tax-related provisions of special purpose vehicles (SPVs) mainly because the finance ministry has asked the Chaturvedi panel to keep off its turf, it is learnt.
Although the committee was focused on measures to relax debt-raising norms and dividend distribution tax for SPVs, it may now be able to address just the issue of dispute resolution, which is only a fraction of the panel’s overall objective.
“Around 75% of the issues the committee was dealing with for its second report were pertaining to the finance ministry. Anything relating to the finance ministry, the committee was asked to leave it to the ministry,” an official close to the development said on the condition of anonymity.
The National Highways Authority of India (NHAI) had sought exemption from payment of dividend distribution tax for SPVs implementing road projects as it dents their financial capability and increases the cost of the project.
Among other sops sought are a relaxation of debt-raising norms, FDI regime and reserve provision for the SPVs.
The committee has suggested that in case the dispute resolution board unanimously settles a claim between Rs 10 crore and Rs 100 crore, NHAI should accept it and not move court against the decision, said an official close to the development.
“Similarly, the committee has recommended that the NHAI accept a unanimous decision taken by the arbitration tribunal in case of projects costing more than Rs 100 crore,” said the official.
A total of Rs 8,600 crore of dispute related claims are pending with the NHAI.
Interestingly, there is an almost equal amount of interest liability piled up on the claims.
NHAI, however, is not in favour of the recommendations. “There is total lack of objectivity in the way the committee has dealt with the issue related to dispute resolution,” said an official.
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