Budget 2001: Full Coverage

With a view to bring power generation to targeted levels, the Budget hasproposed to extend the tax holiday period to undertakings commencing powergeneration or laying a network of new transmission and distribution lines,on or before March 31, 2006, to a 10-year tax holiday in place of theexisting two-tier tax benefit out of the initial 15 years. Tax holiday forroads, highways, rail system, water treatment and supply, irrigation,sanitation and solid waste management systems has been proposed to beextended to 10 years from the existing five years. This may be availed ofduring the initial 20 years.

In the case of airports, ports, inland ports and waterways, industrial parksand power generation and distribution, a tax holiday of 10 years is proposedto be availed of during the initial 15 years. The period of commencement ofbusiness for power and industrial parks has been extended up to March 31,2006.

In addition to the extension of tax holidays, incentives have also beenprovided for investors providing long-term finance or investing in theequity capital of the enterprises engaged in infrastructure facility.

Any income by way of interest, dividends or long-term capital gains fromsuch investments is fully exempt. This concession has been extended toguarantee commissions and credit enhancement fees earned by financialinstitutions from infrastructure enterprises.

Co-operative banks will also be now eligible for exemption of their incomefrom investment in approved infrastructure facilities.

Under the existing provisions of section 80-1A, roads, highways, bridges,airports, port and rail systems are regarded as infrastructure facilitiesand the enterprises engaged in developing, operating and maintaining themare entitled to a tax holiday for five years and a deduction of 30 per centof profits for the next five years. All the proposed amendments will takeeffect from April 1, 2002 and will apply in relation to assessment year2002-2003 and subsequent years. The benefit may be availed by anenterprise in 10 consecutive years out of 15 years beginning with the yearin which such enterprises develops the infrastructure facility.