Industry & Economy
-
Budget
Little to build on
G. Madhan
FOR companies in the business of construction, the 2004-05 Union Budget didn't offer much reason to cheer.
The four percentage point increase in the excise duty of steel (from 8 per cent to 12 per cent) might be a cause for concern for construction companies as this may increase the input cost of raw materials and, in turn, put pressure on margins. Construction companies that have not included escalation clauses in the projects are likely to be impacted by this move.
A service tax of 10 per cent, however, may not have a major impact on construction companies, as builders are likely to pass the increase in cost to their customers. Besides, this tax is not levied on services such as construction of roads, bridges, railway, airport terminals, tunnels and long-distance pipelines. Hence, for companies such as IVRCL Infrastructures, Madhucon Projects and Gammon India, which predominantly execute infrastructure projects, the tax impact is likely to be lower.
Extending the time limit for getting approval of housing projects (for the purpose of tax holiday) is, perhaps, the only solace for companies that build apartments.
The proposal to relax the condition of minimum plot size of one acre (approximately 43,550 sq. ft) for reconstruction or redevelopment of existing buildings also augurs well for builders.
More Stories on :
Budget |
Cartoon
Article
E-Mail
::
Comment
::
Syndication
::
Printer Friendly Page
|
