Infrastructure firms may lose tax benefits

Companies engaged in infrastructure development might lose profit-linked tax benefits in the upcoming union budget for the fiscal year, says a report.

In the budget for 2013-14, likely to be presented to Parliament around the end of this month, the finance ministry is considering doing away with Section 80-IA of the Income Tax Act. The government is estimated to have forgone around 19 per cent of total revenues from this sector on account of various deductions given to the corporate sector in 2011-12, says Business Standard citing unnamed sources.

The government might replace profit-linked incentives with investment-linked ones to encourage investment and propel economic growth, the report says.

''The government may withdraw Section 80-IA in the budget,'' a finance ministry official is quoted as saying.

For 2011-12, the projected revenue foregone under this head was a little over Rs15,000 crore - about 19 per cent of the Rs79,173 crore that could not come into the coffers due to various profit-linked incentives given to corporates.

However, of this total, Rs27,881 crore was projected to come back to the government in the form of minimum alternate tax, so the total net loss could be Rs51,292 crore.