Widening of NH eligible for 10-yr tax holiday: Govt

Govt gave a major relief to infrastructure companies involved in building roads.

Giving a major relief to infrastructure companies involved in building roads,the government today announced that widening of any existing road by constructing additional lanes would enjoy a 10-year tax holiday.

It has been clarified by the Central Board of Direct Taxes (CBDT) that widening of an existing road by constructing additional lanes as a part of a highway project by an undertaking would be regarded as a new infrastructure facility for the purpose of Section 80IA (4)(i) of the Income Tax Act,1961, the CBDT said in a circular.

However,maintenance of an existing road would not be classifiable as a new infrastructure facility,the circular added.

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The new circular simply clarifies the position related to widening of existing highways by treating it as new infrastructure facilities. This would make the infrastructure companies eligible for tax holiday. It would be a relief for players in the sector, Satish Aggarwal,tax partner Ernst and Young said.

Infrastructure companies had sought clarification from the tax department on the issue as to whether widening of existing roads constitutes creation of new infrastructure facility for the purpose of Section 80IA (4)(i) of the Income Tax Act.

Section 80IA (4)(i) provides for a deduction of expenses in infrastructure facility from total income to calculate tax liability.