The overnment may extend the deadline for availing income-tax exemption by power sector projects up to March 2017. Currently, power projects enjoy a 10-year tax holiday up to 2010. Given the slew of upcoming projects over the next five years, the government is planning to extend this fiscal benefit to encourage large-scale investments.a
“I-T exemption under Section 80-IA expires on March 2010. We are considering a proposal to extend the exemption for the power sector up to 2017,” a government source said. Section 80-IA of Income-Tax Act provides for tax exemption on profits for 10 consecutive years to companies in the infrastructure sector, including power.
The exemption was introduced with a sunset clause of phasing out the same by 2010. However, even the proposed ultra mega power projects, which the government has showcased in its development programme for the 11th Plan, would miss out on the tax benefits. Extension of the deadline would come as a major incentive for all power companies.
No decision has been taken on whether the exemption would be extended only for power companies or whether the entire infrastructure sector would be able to avail of the benefit. “Deliberations are on within the government,” the source said. The power sector was expecting an extension of the 10-year tax holiday till 2015 in the Budget.
The government feels it is possible to add 68,869 mw capacity during the 11th Plan, that includes 15,585 mw of hydel power, 50,124 mw of thermal power and 3,160 mw of nuclear power projects. Of the 68,896 mw, projects to generate 31,345 mw are already under construction and the balance capacity has been committed by generating companies during the 11th Plan.
With this capacity addition, it would be possible to achieve a generation growth of 9.5% per annum during the Plan period. A power generation growth of 9% is required to achieve the target of the 9% GDP growth during the 11th Five-Year Plan (2007-12). In the 10th Plan, the generation growth is expected to be around 5.1%, which is far below target. Power generation target for the 10th Plan was 41,110 mw. However, only 17,995 mw of capacity could be added at the end of December 2006.
The government is considering various proposals to introduce reforms in the power sector so the growth in generation is sustained, he said. According to a report, a GDP growth rate of 9% in the 12th Plan would mean an annual energy demand growth of 7.2%. In this scenario, the energy generation should increase to 1,470 BU by 2016-17 from 1,038 BU in 2011-12.
“I-T exemption under Section 80-IA expires on March 2010. We are considering a proposal to extend the exemption for the power sector up to 2017,” a government source said. Section 80-IA of Income-Tax Act provides for tax exemption on profits for 10 consecutive years to companies in the infrastructure sector, including power.
The exemption was introduced with a sunset clause of phasing out the same by 2010. However, even the proposed ultra mega power projects, which the government has showcased in its development programme for the 11th Plan, would miss out on the tax benefits. Extension of the deadline would come as a major incentive for all power companies.
No decision has been taken on whether the exemption would be extended only for power companies or whether the entire infrastructure sector would be able to avail of the benefit. “Deliberations are on within the government,” the source said. The power sector was expecting an extension of the 10-year tax holiday till 2015 in the Budget.
The government feels it is possible to add 68,869 mw capacity during the 11th Plan, that includes 15,585 mw of hydel power, 50,124 mw of thermal power and 3,160 mw of nuclear power projects. Of the 68,896 mw, projects to generate 31,345 mw are already under construction and the balance capacity has been committed by generating companies during the 11th Plan.
With this capacity addition, it would be possible to achieve a generation growth of 9.5% per annum during the Plan period. A power generation growth of 9% is required to achieve the target of the 9% GDP growth during the 11th Five-Year Plan (2007-12). In the 10th Plan, the generation growth is expected to be around 5.1%, which is far below target. Power generation target for the 10th Plan was 41,110 mw. However, only 17,995 mw of capacity could be added at the end of December 2006.
The government is considering various proposals to introduce reforms in the power sector so the growth in generation is sustained, he said. According to a report, a GDP growth rate of 9% in the 12th Plan would mean an annual energy demand growth of 7.2%. In this scenario, the energy generation should increase to 1,470 BU by 2016-17 from 1,038 BU in 2011-12.
