Withdrawal of 10(23G) may hit infrastructure: KPMG
Ahmedabad, Mar 1 (UNI) Financial consultancy firm KPMG today said several announcements in the Union Budget such as withdrawal of section 10(23G) of capital gain tax are sure to adversely affect infrastructure projects.
In an interactive post-Budget session oragnised by Confederation of Indian Industry (CII) here, KPMG partner Hitesh Gajaria feared that withdrawl of exemptions for tax on dividends might prompt financiers, particularly foreign investors, to shun participation in infrastructue projects.
He said most infrastructre projects have long gestation periods and dividends start flowing only after a project reaches break-even point, adding it is only then companies go for listing. Withdrawal of exemptions mid-way might affect the future as well as the onging projects, he added.
Mr Gajaria cited the example of Jawaharlal Nehru Port Trust's bulk cargo terminal going for a Rs 1,100 crore container terminal, getting embroiled in the controversy of being a new or an old project.
He said the Union Finance Minister failed to announce incentives for the infrastructure sector, which is critical to economic growth.
He said one can understand Mr P Chidambaram's effort to increase the tax base and his expectation of tax-payer to be honest, but no sincere attempt has been made to remove the ambiguities in taxation and overlapping taxes which lead to hassles.
KPMG expert on indirect taxes Amitabh Khemka said though service sector comprises 54 per cent of economy, but its share is still very less.
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