Soma's comments on Union Budget

Hi,

Please find below the comments from Mr. Ankineedu Maganti, CEO, Soma
Enterprise Ltd on the Union Budget 2009-10. Would be grateful if you could
carry the same in your esteemed publication.

**

*According to Mr. **Ankineedu Maganti**, CEO, Soma Enterprise Ltd,
*"Themove of the union government to enable IIFCL to refinance banks
in
infrastructure projects is a very positive step. In addition to the
incremental funding available, banks will take comfort from this move, and
be more aggressive in funding projects in various infrastructure sectors.

It would have been a further encouragement for banks to reinstate the income
tax exemption provided to banks lending to infrastructure projects under
Sec. 10 23G, as this would have reduced the cost of debt.

The announcement of increasing the allocation of funds to Highway, Rail and
Urban infrastructure projects though is a positive step, the allocation
could have been higher, especially for Highways.

Currently all infrastructure projects executed on PPP basis enjoy tax
exemption under Sec 80 IA and pay MAT instead. The steep hike in MAT will
impact these projects and reduce the viability. This is detrimental to the
impetus the government is trying to give to PPP projects.

The clarification provided in exemption of Excise duty on goods manufactured
at site for use in construction is a welcome relief. This had been a cause
of tremendous debate over the past couple of years especially with urban
projects depending heavily on pre-cast elements etc.

Similarly applicability of Service Tax on construction projects should also
have been clarified. Currently, there is significant ambiguity in terms of
which projects attract the Service Tax and which do not."

Regards,

Ritu Tanwar

9891598540

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