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Infra companies provided with Rs 4,500 crore irregular tax benefits
24 Nov 2016
As reported, Government auditor Comptroller and Auditor General (CAG) has revealed that the Income Tax Department has provided irregular tax benefits to infrastructure companies without verification. This has a tax effect of over Rs 4,500 crore. This is known to have included Rs 1,766.74 crore tax benefit availed by Reliance Ports & Terminals for construction of captive jetties at Port Sikka in Bihar. Other major companies that have benefitted from this, as reported, include JSW Energy (Rs 340 crore), Reliance Infrastructure (Rs 51.88 crore), Tata Power (Rs 36.99 crore) and Gujarat Fluro Chemicals (Rs 22.75 crore).
As reports reveal, CAG has mentioned in its performance audit of the Revenue Department that Central Board of Direct Taxes (CBDT) may evolve a mechanism for proper linkage between tax benefit allowed by the Income Tax Department to assess the impact of tax holiday.
Tax holiday – offered to encourage investment in infrastructure – is provided to companies under Section 80 IA for deduction in respect of profits and gains of companies engaged in infrastructure development at 100 per cent for a certain period. As known from news sources, the report, tabled in Parliament, is based on test audit conducted by CAG between 2012-13 and 2014-15.