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• With the extended pre-budgetary period on the roll, the Finance Ministry is guided by reality issues vis-a-vis need of the economy while finalizing the budget. One of the major requirements for sustainable growth for the economy is an extensive and robust infrastructure. With promotion of private sector investment on front-foot and certain funding proposals on the desk, the Government has already taken a number of policy initiatives for the development of efficient infrastructure and an enabling environment for private participation and competition in the infrastructure sector.

• While it is uncertain how much this year's budget will offer in the backdrop of deferral of Direct Tax Code (DTC), the infrastructure sector is looking forward to the Government for the required fiscal impetus and policy support to perform in line with the expectations and for the macro economic growth.

• Power is one of the key sector and requires huge investment in near future in view of the overall power shortage the economy is facing. With the constantly growing need for increase in electricity generation capacity and the dominion Ultra Mega Power Projects coming into picture, a need to extend sunset clause under section 80IA of the Income Tax Act, for another 5 year period is indispensable. Tax holiday "benefit" in reality may be going down the plate with the uninvited levy of MAT. Wipe-off of this "incentive neutralizer" is at top amongst the budget wish list for this year.

• M&A activity is very critical for the industry not only from a funding perspective but also for bringing in more efficient technology and management expertise. However, the road block in the form of sub-section 12A to 80-IA of the Income Tax Act, which restricts tax holiday on mergers and demergers is dampening the M&A activity in the sector to a great extent. While the intent of the Government behind this change i.e. to discourage non-serious players from entering the sector seems appropriate, it could think of other safeguards like improving technical parameters instead of restricting the tax holiday.

• While there are recommendations from various committees to increase the excise duty as well as Service tax rates from 10% to 12%; it remains to be seen whether such an increase would happen. With GST implementation getting delayed, it's likely that the FM will announce some significant changes in indirect taxes to align atleast the central levies, as a roadmap towards GST.

• One such proposal is introduction of 'Negative list' concept in Service tax law, which would also widen the ambit of Service tax law.  To minimise debate as to whether a transaction is liable to Service tax, it is important that a clear definition of 'service' is also introduced.  The Cenvat credit rules should be streamlined to ensure that there is no leakage in the credit chain. The definition of input services/ inputs should be amended to widen its ambit which would reduce the unnecessary incremental input cost that currently various industries are bearing.FM may further prune the current Excise duty exemptions and bring more products within the tax net at the concessional rate of 1%, as done for more than 130 items last year.With the Honorable Finance Minister's proposal being the key to Government's mammoth mission of boosting infrastructure development, one hopes that he will recognise the benefits of the above recommendations in meeting the objectives.

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