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Union Budget 2018: How sops to housing, tax rates cut can revive infra sector

Infrastructure companies hope the Union Budget 2018 will provide a boost to the housing sector, especially low-cost housing projects, with some sops.

twitter-logo E Kumar Sharma   New Delhi     Last Updated: January 18, 2018  | 17:02 IST
Union Budget 2018: How sops to housing, tax rates cut can revive infra sector

Infrastructure companies hope the Union Budget 2018 will provide a boost to the housing sector, especially low-cost housing projects, with some sops. Industry experts suggest ways to encourage job creation and investments: spend more on clean water, solar projects, and provide tax breaks to companies spending on skilling programme, which will help in infrastructure building and industry at large. Demand will automatically improve with an increase in job creation, they add.

Infrastructure players also expect the government to reduce GST (Goods and Services Tax) on cement, referred as a core sector, from 28 to 18 per cent. Corporate Tax, Dividend Distribution Tax and Minimum Alternative Tax (Mat) should also be reduced to not just uplift infrastructure but manufacturing or other industries having potential to create investible surpluses, they opine citing that except road projects, players in most verticals are facing challenges. It's pertinent to note that after the increase in government spending on road construction, the sector has been doing well.

Finance Minister Arun Jaitley had promised 5 per cent cut in the Corporate Tax. With only 12 months left for General Elections 2019 - and this being the last Union Budget of NDA - the centre may fulfill the promise. Companies say the Dividend Distribution Tax - paid by firms while distributing dividends - should also be reduced from 20 to 15 per cent as higher profits would encourage reinvestment.

So for example if a company's taxable profit is Rs 100 crore, it has to pay Rs 30 crore as 30 per cent corporate tax. Around 5 per cent tax cut will provide it Rs 5-crore surplus money. Of the remaining Rs 70 crore, if it distributes Rs 50 crore as dividend, it can save Rs 4 crore on desired cut. On combining tax savings from all the three taxes can provide surplus money to companies, which will automatically attract more investment. 

 

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