The National Highways Authority of India (NHAI) has moved the finance ministry, seeking relaxation in the tax regime for highways developers to make the sector attractive.
The sops sought by NHAI include a tax holiday on income during implementation of the project, extension of benefits to contractors and sub-contractors, and rolling back of minimum alternative tax of 15%, among others.
“In the case of upgrade of a four-lane stretch to six lanes, tolling is already taking place. But because toll collection continues, the development of additional facility will take time. Our intention is to provide tax sops on income during implementation to bring down the overall cost of the project,” said an NHAI official.
“A concessionaire does not develop a highway project himself. He ropes in contractors and sub-contractors. However, it is only the concessionaire who gets benefits under the present norms. But since there is only one profit pool that is divided among them, we have proposed that tax sop also be extended to all,” the official said.
Additionally, the authority has also proposed covering a merged or a demerged entity under tax sops.
“If a project developing company gets merged with another entity, the company so formed should have access to tax sops till the period it is implementing the particular project. Also, in the case of a demerger, the one implementing the project should be eligible for tax holiday,” said the official.
A provision for tax-free lending to infrastructure existed earlier, but was withdrawn in 2006.
NHAI has also sought some direct tax rationalisation for the benefit of the highway construction companies.
“Excise exemption is granted only for fabrication work on the site. However, there are certain fabrication works that cannot be implemented onsite and are done offsite. We have proposed excise duty exemption for all offsite fabrication work as well,” said the official.
NHAI has also suggested rolling back of levy of service tax on toll and input service like consultation, which are detrimental in deciding the cost of the project.
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