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Power firms want tax benefits for small projects too

Jan '07
To encourage private investors and attract foreign investors, private power companies should enjoy similar benefits and tax exemptions as mega plants, opined Harry Dhaul of Independent Power Producers' Association of India (IPPAI).

Banks and financial institutions presently have no incentives to finance infrastructure projects. Earlier financial institutions that lent funds to power and other infrastructure sectors were offered tax exemptions under section 23G which was removed on April 1 last year, added Dhaul.

Ravi Jhunjhunwala, Chief Managing Director of LNJ Bhilwara also voiced similar sentiments in favor of incentives to power sectors by financial institutions and suggested introducing scheme similar to Textile Upgradation Funds Scheme for the sector.

Private power producers were also in favor of abolishing Minimum Alternate Tax (MAT) of 10 percent which was reintroduced two years ago. Earlier power projects were exempted from income tax for 10 years, says JL Patel, Vice-President, Finance, Essar Power.

Producers want customs duty concessions on capital equipment for 500 Mw projects which is presently being offered to projects bigger than 1,000 Mw.

Threshold limit in both thermal and hydel power projects be changed so as to extend benefits to power projects of less than 500 Mw in thermal and less than 250 mw in hydel may have concessions similar to larger projects, says Jhunjhunwala.

Demand for extension of tax exemption on profits is also being put forward by power producers as the present 5 year extension on tax exemption on profits is scheduled expire in 2010.

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