in-tax-budget-impact-infrastructure-noexp.pdf

in-tax-budget-impact-infrastructure-noexp.pdf - BUDGET...

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February 2017 BUDGET ANALYSIS I M P A C T O N I N F R A S T R U C T U R E
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Foreword Infrastructure investment and development agenda has been one of the key priorities of the extant Government and the earlier budgets also focused on substantial outlay for infrastructure sector backed with policy announcements to address the key concerns of the sector. Run-up to the Budget for financial year (FY) 2017-18, the Government was faced with a daunting challenge to reinforce the development agenda & the flagship Infrastructure programs of the Government, of addressing the impact of demonetisation on the sector, and at the same time ensuring a populist budget in wake of upcoming state elections. In addition, the Budget was expected to introduce measures to improve ease of doing business in the sector, address financing & contractual issues for stuck projects resulting in increasing non performing assets (NPAs) for the banks and simplify the tax regime for infrastructure projects & the entities involved. The Government has been able to partially meet the expectations. The Budget continues to place emphasis on infrastructure development with an increased outlay of INR 3,961 billion for infrastructure in the budgeted expenditure for FY 17-18. With the merging of Railways Budget with the Union Budget, market was looking forward for key announcements to address long standing needs of the sector. The establishment of a Rail Safety Fund and the focus on railways cleanliness, and redevelopment of stations are welcome announcements. A good allocation of capex for transportation, rural and other infrastructure, including for water efficient micro irrigation are also encouraging steps, as also the development of select airports in tier II cities, supplementing the regional connectivity initiatives. However, omission of any concrete provisions on important infrastructure areas such as ports & shipping and no follow on of critical announcements made in the previous budgets, such as such as National Infrastructure Investments Fund, Public Private Partnership (PPP) Institute, urban infrastructure development schemes came as a dampener. Status of infrastructure sector to affordable housing, which has long been demanded by the industry, is also expected to provide the much-needed boost to the sector thus furthering the social agenda.
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In addition to providing high budgetary allocations to the infrastructure sector, the Budget has introduced additional measures to address some long standing issues in the sector, namely: In addition to providing high budgetary allocations to the infrastructure sector, the Budget has introduced additional measures to address some long standing issues in the sector, namely: i) Institutional and legislative initiatives will be undertaken to improve resolution of disputes in PPP contracts and an amendment to the ‘Arbitration and Conciliation Act 1996 will be introduced; ii) Carry forward of Minimum Alternate Tax (MAT) credit has been allowed for 15 years instead of
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