BUDGET - BMR Advisors

• FBT on ESOPs recovered from employees to be treated as“tax paid” by the employees. Such “tax paid” will not berefunded or adjusted against other tax liability of theemployee• Administrative and procedural amendments proposed inthe Finance Bill, 2008 have not been discussed in thisdocument. These provisions are mostly generic and hencewould be applicable to tax payers in the infrastructure sectoras well.CustomsIn view of the rupee appreciation against the US dollar by 9.8 percent since April, 2007, no changes have been proposed in thepeak rate of customs duty. However, in some cases customsduty has been reduced with a view to provide a fillip to theconcerned industry or to promote value addition or to removeinversion or any other anomaly.Customs duty on project imports reduced from 7.5percent to 5 percentConcessional rate of basic customs duty is applicable onimports in respect of infrastructure projects specified as “projectimports”. The prevailing effective basic customs duty rate inrespect of most project imports was 7.5 percent. It is nowproposed to reduce the same to 5 percent.The reduction would provide a fillip to the infrastructure projects,imports for which were earlier taxable at the rate of 7.5 percent.This would however, not impact infrastructure projects for whichthe prescribed rate of duty is 5 percent or lower.In cases where projects imports were liable to customs duty atthe rate of 7.5 percent, the project owners were inclined toexplore the arbitrage provided under the export promotioncapital scheme of the Foreign Trade Policy. With the reduction inrates of customs duty, this option of arbitrage would now not berelevant.Exemption restricted for goods used in projectsfunded by international organizationsCurrently, goods used for the execution of projects funded byUnited Nations or other international organizations are exempt58indiaBUDGET2008