The Association of Power Producers Deputy Director General (Policy & Regulatory Affairs) Sunil Kumar Sharma wrote a letter to the Department of Revenue Secretary RS Gujral suggesting the key issues likely to impact the power sector to be taken care of in the upcoming Budget.
Sharma suggested the extension of customs duty benefit under the Mega power policy for the entire 12th plan period. The Government has exempted the mega and ultra mega power projects from customs and exise duty to reduce capital costs. Presently, the service tax is chargeable for services rendered for such projects. This increases the costs to the developer and ultimately cost of per unit rate of power.
“Doing away with the requirement of CEA certification in case of Ultra mega power projects is suggested because, obtaining the CEA certification causes delay of at least one to two months affecting the project completion timeline and ultimately increasing the cost of generation”, Sharma quoted in the letter.
The letter suggested the inclusion of electricity in the proposed GST. With the GST being deferred for implementation beyond 1st April, the letter suggested to “ensure full input credit should be available in an unqualified manner. Also, the point of taxation for service tax could be linked to raising of invoice/accounting the same in the books of accounts”.
Sharma also requested to reduce the Central Sales Tax from 2 per cent to 0 per cent as promised by the Finance Minister to scrap it in a phased manner and reduce the import duty on non coking coal used for thermal power plants to zero per cent from 5 per cent. Presently, there is a huge shortage of non-coking coal and without the imported non coking coal, it is very difficult to run the power plants
“Imported non-coking coal for thermal power projects attracts five per cent customs duty... Request to issue an exemption notification to reduce the customs duty from five per cent to nil,” Sharma suggested.
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