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Tax holiday boost for roads, power in 12th Plan

  • HT Correspondent, Hindustan Times, New Delhi
  • |
  • Updated: Mar 17, 2012 01:22 IST

The infrastructure sector including power and roads clearly emerged as the two thrust areas in finance minister Pranab Mukherjee’s budget speech on Friday.

While doubling the availability of cheap funds coming by way of tax-free bonds for the infrastructure sector — entailing an investment of R50 lakh crore in the 12th Plan period — Mukherjee also announced other significant measures including exemption of customs duty on coal, LNG (the two main fuels for the power sector), extending tax holiday period for power generation projects, a 14% higher allocation for the roads and highways sector.

While it was widely expected that customs duty exemption on imported power equipment would be withdrawn to boost domestic manufacturers, the budget did not make such a proposal, thereby giving the much-needed relief to developers.

“From the domestic manufacturers perspective, increase of across-the-board excise duty on domestic manufacture would adversely impact local manufacturers as imports (appears) to be exempt,” said Sujit Ghosh, Partner BMR Advisors.

“We welcome the recommendations on extended tax incentives, removal of customs duty on imported coal, natural gas and imported LNG,” said Anil Sardana, MD, Tata Power.

JP Chalasani, chairman, Association of Power Producers (APP) and CEO, Reliance Power, said the budget announcements included “far reaching measures that will ensure increased fuel availability for the power sector and coal mining besides reducing cost of borrowings for this capital intensive sector.”

The plan outlay for road transport and highways ministry has been increased to Rs 25,360 crore in 2012-13 from R22,366 crore in 2011-12.

 

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