Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com HRindiaonline.com
 
LOGIN
Forgot Password |  Register
Wednesday , April 23, 2014 | Updated : Apr 23, 18:04 IST
Income Tax    Customs    Excise    Service Tax    FEMA    DGFT    SEZ    Misc    Pitara    Budget   
About Us Contact Us Advertise
Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com
NEWS FLASH
 
Mumbai Service tax recovers tax from Videocon Group Companies; arrests one person (See 'Mixed Buzz') MoF notifies 8% interest rate for Savings (Taxable) Bonds, 2003 (See Notification in 'What's New') RBI Panel Report favours Enabling PKI in Payment System Applications (See 'Mixed Buzz') IRCON inks MoU with Transparency International India (See 'Mixed Buzz') CENVAT credit on Construction service received prior to 01.04.2011 - services had been rendered and billed prior to 1.4.2011 for which payment has also been paid prior to 1.4.2011 - Credit taken on 28.04.2011 cannot be held to be improper : CESTAT (See 'Breaking News') CX - So-called 'special discount' is not discount at all is established by fact that it was never passed on to customers of cars and, therefore, is includible in AV - Demand of Rs 59 Cr upheld: CESTAT (See 'Breaking News') CAG entitled to audit private telecom service providers - SC (See 'DDT' Column) ST - Tax of more than Rs 5.8 Cr collected from clients but not deposited with Govt - suppression of facts with willful intention to evade duty is manifest - no merit in plea for waiver of SCN as s.73(4) expressly disentitles same: CESTAT (See 'Breaking News') Disposal by Commissioner (A) - Quantity or Quality? (See 'DDT') Income tax - Whether when assessee holds substantial shares in partnership firm and also Company, any trade advance given by company to firm is to be treated as deemed dividend - NO: ITAT (See 'Breaking News') What about Central Excise and Service Tax Audit? (See 'DDT') CX - Sum claimed as refund is not shown as 'receivables' in books and same were expensed out in P&L a/c - Claim hit by unjust enrichment: CESTAT (See 'Breaking News') Chennai CBI Court convicts Customs Appraiser for one year in bribery case Former Cabinet Secretary TSR Subramanian book raps Govt for poor decision making process ST - BAS provided to foreign clients - When RBI permits that remuneration towards services provided can be received in IC, in that situation it cannot be said that services are not exports -Stay dismissed: CESTAT (See 'Breaking News') MoF invites applications for post of Chairman of Settlement Commission (Customs & Excise') (See 'Service News' in Pitara) CENVAT Credit on input service of GTA up to Place of Removal - what is place of removal when rate of duty is specific? HC stays Tribunal Order (See 'DDT') RBI clarifies on FDI in pharma sector (See Cir 124 in 'What's New') Tour operators: Travelling in uncertainities of law - Part-II (See 'ST se GST tak' Column) Kerala General Sales Tax Act - sale by brand name holder or trade mark holder to be first sale for purpose of Sec 5(2): Supreme Court (See 'Breaking News') Anti Dumping Notification Expired- CBEC are you aware? (See 'DDT') I-T - Whether assessment can be reopened based on audit objections which give rise to only hypothetical income: HC (See '2014-TIOL-534') Lame Duck appointments - Principal Economic Adviser appointed in Fin Min ('DDT')
 
Bookmark and Share
Mr FM, it's time now to allow the wind power to stand without tax incentives!

By Naresh Minocha

''PROMOTIONAL and fiscal incentives are being provided to create the necessary market ‘pull’ or short-term demand that will lead to expansion of the industry and subsequent reduction in costs.”

So said the Ministry of Non-conventional Energy Sources (MNES) about the wind power in 1996 in a background note prepared for Consultative Committee of Parliament.

The wind power has come a long way since then. From capacity of less than 500 megawatt in 1996, India today has 2900 MW capacity. This is fifth largest capacity base in the world after Germany, Spain, the United States and Denmark.

This impressive performance and certain other achievements in the wind sector prompts one to ask: Should there not be sunset clause for fiscal package enjoyed by the wind power? Should the Government not transfer these very concessions to other sources of renewable or alternate sources of energy that have not reached the take-off stage or are at the infancy?

To answer these questions, one need to delve deeper into fiscal-led market pull for grid-interactive electricity generated by wind farms.
The tax incentives that existed at that time included 100% accelerated depreciation in first year, 5-year income tax holiday, customs duty exemption on nine components used in production of wind turbines. The States also offered generous dole-outs such as sales tax incentives and assured purchase of power at specified tariff.

The tax incentives were in fact introduced several years prior to 1996 for the wind power. They have been modified over the years and are no less attractive even today. The Central Government’s fiscal package includes 80% accelerated depreciation, 10-year income tax holiday, and excise and customs duty concessions on components.

Till 22 February 2005, a textile mill could avail of soft loans for wind turbine generators under the Textiles Ministry-administered Technology Upgradation Fund.

The States also have been very supportive to wind power projects initiated by the corporate sector. Tamilnadu, for instance, buys wind-generated electricity @ Rs 2.70/unit.

According to the Tamil Nadu Energy Department’s policy note for 2005-06, “the investors of the wind mills can avail of wheeling facilities by which the power generated from windmills can be used in other places in the State on payment of 5% as wheeling charges to TNEB (Tamilnadu Electricity Board). Further, they can avail of banking facilities for their power generated during a few months for using it throughout the financial year on payment of additional charge of 5% to TNEB.”

Other State Governments have also in place policies and procedures that are broadly pattern on the guidelines for wind power issued by MNES. Moreover, MNES and other government bodies have been funding activities such as wind monitoring and identification of suitable sites for locating wind farms. This reduces the cost of expenditure on project planning that the companies incur before taking final investment decision.

Different components of wind mills including their dimensions have undergone impressive improvements over the last 10-15 years. The capacity rating of wind mills has increased from 50 Kilowatt (KW) in 1980 to 5000 KW in 5000 KW in 2004. The diameter of rotor has increased from 15 metres to 124 metres. The height of tower has increased from 20 metres to 100 metres, according to data available with wind energy industry.

The capital cost for wind-based power plant at Rs 4.5 crore/MW thus today compares favourably with that of coal-fired power plant at Rs. 3.5-4.5 crore/MW. The former, however, enjoys the advantage of zero fuel cost over the latter.

This shows that wind power projects can stand on their own or at best would require a modest set of incentives that could be phased out over five years or so.

Another factor that shows that the wind sector has gained enough momentum is that the sector is primarily driven by private investments. Most of the wind farms have been set up private companies across the entire spectrum of industries ranging from cement, chemicals, investment and trading to oil drilling services. The State electricity Boards (SEBs) have few number of wind mills.

Some cash-rich companies such as Oil and Natural Gas Corporation and Hindustan Petroleum Corporation have been toying with idea of setting up very large wind farms with capacity of 50MW-100 MW.

All these favourable pointers suggest that the wind energy sector can grow rapidly on its own. The time is thus ripe for the Central Government to phase out tax incentives over five years or reduce to the modest levels.

If there is sunset clause for every other tax incentive and for every sector, why should there not be similar provision for the wind sector?

Taking a long-term perspective, there has to be level-playing fiscal or subsidy field for all sections with the renewable and alternative energy sources, if we have to have an integrated renewable energy policy.


POST YOUR COMMENTS
   
 
 
TIOL SEARCH
 
TIOL Mobile App
TIOL Subscriptions
 All-In-One Package
 Indirect Tax Package
 Income Tax Package
<< More Packages>>
 
   
             
Income Tax Customs Excise Service Tax FEMA DGFT SEZ Misc Pitara Budget
  • Notifications
  • Circulars
  • SC Cases
  • HC Cases
  • ITAT Cases
  • Instructions
  • Advance Ruling
  • Settlement
  • Other Case
  • Directorate of Income Tax (Systems)
  • Tariff Notfn
  • Non Tariff Notfn
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Settlement
  • Advance Ruling
  • Safeguard Duty Notfn
  • Anti-dumping Notfn
  • Drawback Cases
  • Tariff Notfn
  • Non Tariff Notfn
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Settlement
  • Advance Ruling
  • Excise Amendment
  • Clean Energy Cess Notfn
  • MISC Circulars
  • Commr.(A) Order
  • Notifications
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Miscellaneous
  • Advance Ruling
  • FAQ
  • Finance Act, 1994
  • Commr. (A) Orders
  • Removal of Difficulty
  • VCES
  • Accounting Head
  • Exchange Manual
  • Fema Notifications
  • SC Cases
  • HC Cases
  • RBI Notifications
  • Act
  • Rules
  • Regulations
  • Master Circulars
  • RBI Circulars
  • Notifications
  • Circulars
  • Public Notices
  • Trade Notice
  • FTDR Amendment 2010
  • MISC
  • State Acts
  • Notifications
  • Instructions
  • Act 2005
  • Rules 2006
  • DGEP
  • State Policy
  • SC Cases
  • HC Cases
  • VAT Cases
  • Deputation Posts
  • Service News
  • The Insider
  • Transfer
  • Promotion
  • Recruitment Rules
  • Transfer Policy
  • Training Circulars
  • Service Cases
  • MISC
  • Pay Commission
  • Cadre Review
  • Budget Circular 2013-14
  • Union Budgets
  • Economic Surveys
  • Budget Speeches
  • Finance Acts
  • Finance Bill
  • TRU - D. O. Letter
  • A Taxindiaonline Website. Copyright © 2014 Taxindiaonline.com Pvt.Ltd. All rights reserved. | Powered by 4th Dimension