In a country where infrastructure is a key driver of growth and an important pillar for sustainable development, SRKA & COMPANY works in tandem with our clients engaged in the construction of roads, railways, housing & commercial real-estate, generation of power and undertake heavy engineering services in related infrastructure developments including exploration of gas, mineral oils, power generation etc.
SRKA & COMPANY works with companies providing energy through traditional and alternative energy sources to navigate today’s challenges, including the changing fuel mix, supply distribution and access issues, efforts to de-carbonize energy generation and commodity cost volatility.
We work across market and regulatory cycles to develop and help implement strategies that will deliver results across a dynamic regulatory environment, reducing litigation, improving process inefficiencies and building transparency in disclosures.
- Power & Electricity
- Oil & Gas
- Ship Broking
- Heavy engineering
Major Fiscal Incentives for Infrastructure Sector
Various fiscal incentives are provided by the Government of India for promoting Infrastructure Sector in economy Some of the key incentives are outlined below:
SOVEREGIN WEALTH FUND
The decision of central government to grant 100% tax exemptions for sovereign wealth funds for their investments in infrastructure sector is expected to give a boost to the infra investments in India. Besides the exemption, abolition of dividend distribution tax (DDT) is also will give benefits to the global yield-seeking infrastructure investors in India.
In order to incentivise the investment by the Sovereign Wealth Fund of foreign governments in the priority sectors, I propose to grant 100% tax exemption to their interest, dividend and capital gains income in respect of investment made in infrastructure and other notified sectors before 31st March, 2024 and with a minimum lock-in period of 3 years,”
The government on Saturday announced 100% tax exemption on long-term capital gains, dividend and interest on investment into infrastructure made by sovereign wealth funds (SWFs). It also brought tax treatment of unlisted infrastructure investment trusts (InvITs) at par with listed ones
GST on Infrastructure:
In the pre-GST era, a majority of construction contracts, being work contracts, were subject to a combination of both service tax and VAT. A service tax of around 4.5% (assuming taxable component of the service contract is 30%) and VAT ranging from 1-15%, depending upon the state, was applicable to construction contracts. Moreover, there were several construction activities, such as the construction of roads, dams, irrigation, that were exempt from service tax. However, such activities were subjected to VAT. Under the GST law, the rate prescribed for taxing works contracts is 18% and such rate difference vis a vis the applicable rate under pre-GST regime is more prominent for construction activities falling under the service tax exemption category. However, availability of higher pool of input tax credit in the hands of the contractors could help neutralising such higher output GST. On the other hand, a higher GST rate could also result in higher costs, if there is limited scope for renegotiating construction contracts, and contracts that do not account for contingency factors. Multiple GST rates (5%, 12%, 18% and 28%) on procurement of inputs and input services is another aspect which adds complexity and leads to unwarranted classification disputes. This has partially been recently addressed with rate reduction from 28% to 18% coming into effect on 27 July 2018.
- Simplification of Tax rates and tax filling procedure for infrastructure development companies.
- Elimination of Inter state Check post which substantially reduce the travel time of truck carrying raw material for infrastructure.
- Unification of tax rates has led to a wider and more competitive market access for procurement of raw material to infrastructure development companies.