Direct Tax Code 2010 - Impact on Infrastructure

Sector
The Direct Tax Code ('DTC') Bill - 2010 has been tabled in the Lok Sabha on 30 August, 2010.
The Bill seeks to replace the Indian Income-tax Act, 1961. The DTC is now proposed to come into
effect from April 1, 2012 (i.e. Financial Year 2012-13). Some of the important provisions that
may be of relevance to the infrastructure sector are highlighted below for your quick reference:
• New Infrastructure projects post 31 March, 2012 eligible for investment-linked incentives
• Profit-linked incentives to continue for projects eligible upto 31 March, 2012 under current
law; incentives to continue only for balance unavailed period of deduction
• Under the investment based regime, no ring fencing of losses from incentive business against
normal business
• Minimum Alternate Tax ('MAT') applicable @ 20% of book profits
• MAT credit allowed to be carried forward up to 15 years
• New Special Economic Zone ('SEZ') developers and units post 31 March, 2012 eligible for
investment-linked incentives
• Profit-linked incentives to continue for SEZ developers if SEZ is notified on or before 31
March, 2012; incentives to continue only for balance unavailed period of deduction
• Profit-linked incentives to continue for SEZ units if eligible under current law on or before 31
March, 2014; incentives to continue only for balance unavailed period of deduction
• SEZ Developers also to pay MAT as above and dividend distribution tax @ 15%
• Branch profits tax @ 15% leviable on income attributable directly or indirectly to a Permanent
Establishment or immovable property of a foreign company situated in India as reduced by
the corporate tax (@ 30%) on the same
• Presumptive taxation scheme continued except the change in percentage of presumptive
taxable income in case of non-residents engaged in business of:
• - providing services / supplying plant and machinery in connection with prospecting for, or
extraction or production of, mineral oil or natural gas - increased from 10% to 14% of gross
receipts
• - operation of ships - increased from 7.5% to 10% of transportation charges
• - operation of aircrafts - increased from 5% to 7% of transportation charges
• Code retains the existing tax regime applicable to Vencture Capital Funds / Venture Capital
Companies i.e. investments in the nine specified sectors
Trust the above will serve as a quick update on the important provisions of DTC 2010 impacting
the infrastructure sector.