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Budget includes measures to allow corporates to access lower cost funds

March 16, 2012 - New Delhi

Union Finance Minister Pranab Mukherjee today announced a slew of measures to allow corporates to access low cost funds and also to promote higher level of investments in several sectors.

Presenting the General Budget 2012-13 in the Lok Sabha, Mukherjee said too provide low cost funds to stressed infrastructure sectors, the rate of withholding tax on interest payments on external commercial borrowings (ECBs) has been proposed to be reduced from 20 per cent to five per cent for three years.

"These sectors are power, airlines, roads and bridges, ports and shipyards, affordable housing, fertilizer and dams" he said.

To promote higher level of investments, the restriction on Venture Capital Funds (VCFs) to invest only in nine specified sectors has been proposed to be removed.

It has further been proposed to remove the cascading effect of Dividend Distribution Tax (DDT) in a multi-tier corporate structure.

Mukherjee also proposed to continue to allow repatriation of dividends from foreign subsidiaries of Indian companies to India at a lower tax rate of 15 per cent as against the tax rate of 30 per cent for one more year i.e. upto March 31, 2013.

Mukherjee also proposed to provide, investment linked deduction of capital expenditure incurred in the businesses of cold chain facility, warehouses for storage of foodgrains, hospitals, fertilizers and affordable housing at the enhanced rate of 150 per cent, as against the current of 100 per cent.

Also new sectors have been proposed to be added for the purposes of investment linked deduction which include bee keeping and production of honey and beeswax, container freight station and inland container depots and warehousing for storage of sugar.


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