BUDGET - BMR Advisors

Customs and Excise duty rationalization fortransmission equipmentsUnder the present fiscal regime, transmission equipments aresubject to customs duty at the rate of 7.5 percent and excise dutyat the rate of 16 percent. It is expected that these would bebrought under a uniform duty structure of 5 percent basic dutyand 8 percent CVD.Relaxation of conditions for availment of excise dutyexemption for mega power projectsThe current fiscal regime provides complete exemption fromexcise duty to mega power projects only if such projects procuretheir domestic equipments vide International competitivebidding. Based on various media reports, it appears that theproposed new mega power policy suggests that thisrequirement be done away with for all mega power projects inwhich sale of a specified quantum of power (60 percent for hydeland 85 percent for thermal projects) is through tariff basedcompetitive bidding. For other mega power projects, thecondition is suggested to continue. It is expected that the abovesuggestions shall be implemented through Budget 2008.Relaxation of conditions for availment of Customsduty exemption for mega power projectsThe current fiscal regime provides complete exemption fromcustoms duty to mega power projects subject to, inter alia, theconditions outlined below:(i)The power purchasing State has constituted the RegulatoryCommission with full powers to fix tariffs(ii) The power purchasing State undertakes, in principle, toprivatize distribution in all cities, in that State, each of whichhas a population of more than one million, within a period tobe fixed by the Ministry of Power(iii) The mega power project sales its power to states other thanthe state of its locationBased on various media reports, it appears that the proposedmega power policy may dispense with all the above conditions.It is expected that the above suggestion would be implementedvide the Budget 2008.indiaBUDGET200843