| Currently, incentives under mega power policy are confined to stand-alone power projects. |
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| The finance ministry has rejected a proposal to give tax incentives to captive and merchant power plants. |
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| Currently, fiscal sops and tax incentives under mega power policy are confined to stand-alone power projects. The power ministry wants to modify the policy to make captive and merchant plants eligible for mega power plant status. |
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| Fiscal concessions, besides distorting the tax structure, act as hidden subsidies and are unfair to other sectors, which do not enjoy similar treatment, said the revenue department, responding to a draft Cabinet note prepared by the power ministry to modify the Mega Power Policy. |
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| The policy offers incentives such as complete waiver from Customs duty on equipment imports and a 10-year tax holiday to thermal power projects with a minimum capacity of 1,000 Mw and hydel projects of 500 Mw capacity. |
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| Under the modified mega power policy, incentives are proposed to be given only if developers of a power project (captive, merchant or others) undertake either tariff-based competitive bidding for the entire power to be produced or go in for international competitive bidding for procuring equipment. |
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| However, the new policy proposes to abolish the condition of mandatory inter-state sale of power to avail of tax incentives. It has also sought to do away with the provision that requires power purchasing states to agree in-principle to privatise distribution in all cities with a population of over one million. |
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| The Department of Revenue was of the view that sectoral development should be supported through budgetary allocation or Plan support to achieve quantifiable results in a time-bound manner. The Department of Revenue does not support the proposals enumerated in the draft Cabinet note, it added. |
