Budget Memorandum

Incentives for infrastructure development and industrialisation

Solid Waste Management and Water Treatment Systems provided Tax Holiday for development of Urban Infrastructure

Under the existing provisions of the Income-tax Act, a five year tax holiday and a deduction of 30% in the subsequent five years (within a period of initial fifteen years), is allowed to a company or a consortium of companies, operating and maintaining infrastructure facilities in the nature of roads, highways, bridges, airports, ports, rail system or any other public facility of a similar nature. Water supply projects, irrigation projects, sanitation and sewerage systems also form part of infrastructure facilities under these provisions.

The country needs large investments in the areas of urban infrastructure, including public health. In order to attract commercial enterprises to operate such facilities, the Bill proposes to extend the benefit of tax holiday to other infrastructure facilities, namely, water treatment and solid waste management systems.

The proposed amendment will take effect from the 1st April, 2001 and will, accordingly, apply in relation to the assessment year 2001-2002 and subsequent years.[Clause 35]