India’s highway builders urge tax reforms to unlock stalled infrastructure projects
Highway developers and infrastructure firms have called on the Indian government to resolve long-standing tax issues in the upcoming Union Budget 2025-26. Their demands focus on easing cash flows, reducing litigation and fixing compliance hurdles that slow down major projects. Industry leaders are also pushing for policy changes to attract more institutional investors into Infrastructure Investment Trusts (InvITs).
The sector has raised concerns over overlapping tax rules, particularly the double compliance burden created by TDS (Tax Deducted at Source) under Section 194Q and TCS (Tax Collected at Source) under Section 206C(1H). This overlap has blocked working capital and caused operational delays in large-scale infrastructure projects.
Another major request is for clarity on depreciation treatment of road assets. Companies want roads operated under concession agreements to be classified as intangible assets, making them eligible for depreciation. This would align tax rules with the long-term nature of highway projects. The industry is also seeking legislative changes to prevent the disallowance of expenses under Section 14A when no exempt income is earned. Additionally, they want relaxed rules for carrying forward losses in infrastructure special purpose vehicles (SPVs) after mergers, stake sales, or restructuring. This would ensure that losses tied to long-gestation projects remain usable despite ownership changes. To boost funding, highway builders have asked the Ministry of Finance, SEBI, and the Ministry of Corporate Affairs to broaden access for institutional investors in InvITs. These changes would help channel more funds into infrastructure development, supporting the government’s monetisation goals.
The proposed tax and policy adjustments aim to streamline compliance, improve cash flow, and reduce disputes in the infrastructure sector. If implemented, these changes could accelerate project execution and strengthen investor confidence in India’s highway and infrastructure growth.
