MoP seeks concessions for HEPs under construction

The MoP has sought concessions for under-construction hydroelectric projects (HEPs) in the upcoming budget. It has proposed to include these projects under the renewable energy category along with solar and wind power projects, which would entitle them to significantly lower tax rates. Under the current tax regime, renewable energy projects attract zero excise duty, value added tax at the rate of 0-5 per cent and a central sales tax levy of 2 per cent. Currently, only small-hydro projects up to 25 MW are regarded as renewable energy projects. Further, the MoP has proposed the granting of “deemed export” status to hydel projects that is likely to cost the government around Rs 8.8 billion in taxes over a period of five years.