Ahead of the 2012-13 Union budget, electrical equipment industry body IEEMA has demanded extension of service tax exemption to all power projects, including generation, transmission and distribution.

Indian Electrical and Electronics Manufacturers' Association (IEEMA) has demanded extension of exemption to all power projects in line with other infrastructure projects like roads, airports, ports, a release issued here today stated.

"The domestic electrical equipment manufacturing industry suffers a substantial cost disadvantage of 14 percent vis-a-vis imports due to the levy of several local taxes," IEEMA President Ramesh Chandak said.

He said that the government should provide a level playing field to domestic manufacturers as per recommendations of the Arun Maira Committee, by levying customs duty at 10 percent and special additional duty (SAD) at four percent and waiving countervailing duty (CVD) on all categories of power projects.

"Simultaneously, deemed export benefits in the form of excise duty exemption or refund should also be provided to the domestic suppliers," he demanded.

Currently, all imports are exempted from levy of central sales tax (CST) or value added tax, while all domestic supplies attract CST at two percent and VAT from 5-14.5 percent though the state governments have been advised to exempt supplies to mega power projects from sales tax and other local levies, he said.