Central government reduces corporate tax

The central government’s move to reduce the corporate tax rate is expected to save Rs 25 billion a year for state discoms. The move would allow generators with cost-plus PPAs to pass on tax cuts to distribution utilities. Central government entities such as NTPC Limited, NLC India Limited, the Damodar Valley Corporation, Power Grid Corporation of India Limited and NHPC Limited have cost-plus tariff structures, leading to pass-through of lower tax incidence to the discoms. State-owned generating companies and transmission companies would also benefit from the lower tax incidence, which would be passed on to the discoms under the regulated cost-plus tariff structure.