Budget May Roll Tax Sops For Power Sector

The Union Budget is an opportunity both for populist as well as meaningful measures to kickstart various sectors and power is one such area, which could do with more incentives. Finance Minister P Chidambaram is all set to announce a new set of measures to add capacity in the sector. According to sources, there may be an excise cut on power equipments from 16 per cent to 10 per cent. The income tax exemption for investment of up to Rs 50,000 in power bonds may be allowed, sources said, adding that CFLs and Energy efficient ACs may get excise cut by 5-6 per cent. The appreciation of rupee may hold FM from making any change in customs duty currently at 5 per cent for non-mega power projects but the cut in excise duty rates may be sufficient for the industry as the cut will translate into lower operational cost for the companies in the business.

The power sector also feels there is a strong case for rationalization in duties as that will make the sector more attractive. There is a case for excise duty cut, said Ravi Uppal, Chairman, ABB India. The electrical equipment companies have grown at a rapid pace in the last few years. However, going by the order inflows of these companies and with the sops expected in the budget, we can expect a much higher growth in the sector. With spiraling fuel prices, there is an urgent need to give incentive to renewable and non-conventional energy and the finance minister may do exactly the same.