The government expects to encourage investment in the power sector through measures like lower tax rates for new electricity generation firms and pushing for a switch to prepaid meters to improve efficiency in collecting money for services provided to consumers.
Finance Minister Nirmala Sitharaman on Saturday proposed to extend provisions offering concessional corporate tax rates of 15 per cent to new companies in the manufacturing sector to new domestic electricity generation firms (gencos).
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The concessional rates under the Taxation Law Amendment Act, 2019 would be provided to power producers on the condition that they start generating electricity by March 31, 2023, stated Sitharaman in her Budget speech. The amendment will take effect from April 1, 2020, according to the supporting Budget documents.
She also urged states to replace conventional electricity meters with prepaid smart meters over the next three years, in a move to relieve financial stress on electricity distribution companies (discoms).
“Also, this would give consumers the freedom to choose the supplier and rate as per their requirements,” said the minister, adding that “further measures” to reform discoms would be taken and that the government would be providing about Rs 22,000 crore to the power and renewable energy sector in 2020-21.
Last year, the government allowed concessional corporate tax rates to manufacturing firms set up on or after October 1, 2019 and engaged in activity like mining, developing computer software, converting items like marble blocks into slabs, printing books and producing cinematograph film. These firms could opt to pay the 15 per cent rate only if they do not avail of “any specified incentives or deductions”.