Budget 2012: Provide tax incentives to boost infrastructure sector, says E&Y

Power sector is one of the key sectors of the economy and requires huge investments in the near future. Ernst & Young in its pre-budget memmorandum has highlighted the need for provision of appropriate tax incentives to push the growth in this sector. Presently, units in the power industry are entitled to a tax holiday under section 80-IA if they commenced operations before 1 April 2011.


Also Check: Budget 2012 at ET | Union Budget | Rail Budget 2012 | Budget News


A limited period incentive may again be provided to give thrust to the power sector. Presently, infrastructure businesses are liable to pay MAT. With a view to give a further fillip to the infrastructure sector, profits from such business may be exempted from MAT. It may be noted that the erstwhile MAT provisions exempted power and infrastructure undertakings from the purview of MAT.

Presently, an individual and HUF taxpayer is allowed a deduction of upto Rs. 20,000 towards investment in long-term notified infrastructure bonds made during the years 2010-11 and 2011-12. This provision was made in tune with the policy of promoting investment in the infrastructure sector. In order to give a further fillip to this objective, the present limit may be raised to Rs. 1 lakh and the period may be extended by one more year.