The government has clarified that widening existing road by constructing an additional lane as part of a highway project is eligible for tax concession provided to other infrastructure activities under section 80IA (4)(i) of the Income Tax Act.
However, merely relaying of an existing road cannot be classified as a new infrastructure facility, so it would not be eligible for any tax exemption under the tax laws, the circular issued by Central Board of Direct Taxes (CBDT) clarified.
?Widening of an existing road by constructing additional lanes as a part of a highway project by an undertaking would be regarded as a new infrastructure facility for the purpose of Section 80IA (4)(i). However, simply relaying of an existing road would not be classifiable as a new infrastructure facility for this purpose,? the circular said.
The section 80IA (4) (i) of Income Tax Act provides for a tax concessions by way of deductions to an infrastructure developer or operator and maintainer, or anyone who is engaged in all the three activities. Till the circular had clarified the status, the section defined infrastructure facility as a road including toll road, a bridge or a rail system and a highway project including housing or other activities being an integral part of the highway project.
The CBDT had to issue a clarification to the effect as there was confusion over the issue for some time.