Tax expenditures of leading infrastructure companies rising

The latest survey of Associated Chambers of Commerce and Industry (ASSOCHAM) reveals that tax expenditures of companies with regard to the infrastructure status have gone up by 90.3 percent. Well, the disclosure has astounded many since it is in disagreement with the common belief. Financial Pulse study of the venerated organization makes it clear that all these (tax expenses for companies under the infrastructure status) have risen on account of improved realizations.

Furthermore, the same has contributed to better margins and enhanced bottomlines of such companies, increasing their tax liabilities in that way.

It must be mentioned that infrastructure status is bestowed upon industries and companies that are engaged in a range of activities like building expressways, highways, airports, ports and rapid urban rail transport systems. The corporates analyzed for the study for the first quarter of 2009-10 included Gammon Infrastructure Projects (25.4 percent), GMR Infrastructure (67.9 percent), Lanco Infratech (182.1 percent) and Supreme Infrastructure (85.7 percent).

Speaking on this, Sajjan Jindal, President of ASSOCHAM, said “In order to drive the Indian economy on a serious institutional reform-led growth, infrastructure still remains one of the most critical issues requiring a fresh look at the core level.”

On the other hand the study elucidates, on the interest cost parameter the real estate sector has been found to be in maximum divergence. The hospitality sector, one of the worst affected sectors owing to the global economic downturn, is next to the real estate sector on the basis of divergence in growth rate of interest cost. The growth in the financing cost of hotels stood at 86 percent.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) is the umbrella body of chambers of commerce in India. Established in 1920, it now has a membership of over 100,000 companies across the country. The organization represents the interests of trade and commerce in India, and interacting with the Government of India on policy issues, and liaisoning with their international counterparts to promote trade between India and other nations.