Port trusts ask for tax sops on dredging of channels, berths

NEW DELHI: Major port trusts have asked the government to extend tax benefits for capital dredging of channels and berths. They have proposed an amendment to the Income Tax Act for expanding the definition of infrastructure facilities in port sector.

Section 80 IA refers to the availability of benefits for infrastructure facilities notified by the central board of direct taxes (CBDT). At present, infrastructure status is confined to storage, loading and unloading.

Major port trusts have sought tax exemption in developing, operating and maintaining dredging infrastructure facilities. “Capital dredging of channels and berths is critical for capacity addition. Under the national maritime development programme (NMDP), these facilities need to be treated as essential infrastructure for which tax benefits need to be extended,” a Mumbai Port Trust official said. Deepening of channels is imperative for common use, he added.

The port trusts have asked the government to amend Section 80 IA on the grounds that it has a ‘restrictive definition’ for infrastructure, especially at ports. They have proposed an inclusion of the terms ‘navigational channels’ and ‘national seaways’ in the Act to the existing infrastructure facilities, presently eligible for tax exemption. Cuurently, the Act includes ports, airports, inland ports and inland waterways.Under Section 80 IA of the Act, profits of an industrial undertaking or an enterprise from the business of developing, operating and maintaining infrastructure facilities is allowed as deduction at 100% for 10 consecutive assessment years.

With containerised cargo movement growing by over 14% in the country, ports have lined up major capital dredging projects to accommodate larger vessels. The exemption is likely to give a major fillip to dredging companies and ports, which have to bear huge costs in the process. Dredging is classified into maintenance dredging, which involves the maintenance of water depth in the existing channels of ports and capital dredging, required for developing new port projects.