The ministry of power has called for rationalisation of duties in the power sector. It has suggested reducing excise duty from the present rate of 16% to 8%. On the Customs duty front, it has asked for a rationalisation of six different duty structures to two-one for mega power projects and the other for non-mega power projects.
The ministry of power has argued that neither Cenvat nor modvate can be levied on electricity as it is not a good on which excise can be levied. Hence, the excise duty should be reduced from the present level of 16% to 6% and countervailing duties should be aligned accordingly.
On rationalising Customs duty, the ministry has argued that while mega power projects attract 0% Customs and countervailing duties, transmission projects associated with these projects are levied a 10% Customs duty and a 16% CVD. The ministry would like the concessional zero Customs duty regime to be extended to transmission projects associated with the mega power projects. This would also include the ultra-mega power projects, as the mega power project tax structure applies to these projects as well.
For projects other than the mega power projects, the ministry has suggested that imports required for initial setting up or expansion of projects, renovation & modernisation, capital goods for generation, spares, transmission, subtransmission and distribution should attract a Customs duty of 5% and countervailing duties of 8%. At present, spares are levied a Customs duty of 12.5% and 16% CVD while transmission, sub-transmission and distribution attracts a Customs duty of 10% and CVD of 16%.
The ministry of power has argued that neither Cenvat nor modvate can be levied on electricity as it is not a good on which excise can be levied. Hence, the excise duty should be reduced from the present level of 16% to 6% and countervailing duties should be aligned accordingly.
On rationalising Customs duty, the ministry has argued that while mega power projects attract 0% Customs and countervailing duties, transmission projects associated with these projects are levied a 10% Customs duty and a 16% CVD. The ministry would like the concessional zero Customs duty regime to be extended to transmission projects associated with the mega power projects. This would also include the ultra-mega power projects, as the mega power project tax structure applies to these projects as well.
For projects other than the mega power projects, the ministry has suggested that imports required for initial setting up or expansion of projects, renovation & modernisation, capital goods for generation, spares, transmission, subtransmission and distribution should attract a Customs duty of 5% and countervailing duties of 8%. At present, spares are levied a Customs duty of 12.5% and 16% CVD while transmission, sub-transmission and distribution attracts a Customs duty of 10% and CVD of 16%.
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