Power ministry may recommend GST cut on hydro project components

livemint.com:

NEW DELHI : The union ministry of power is likely to ask for a cut in the goods and services tax on components used in hydropower projects. The ministry may seek a cut in components like turbines, steel and cement which are in the higher slabs, two people aware of the matter said. The suggestions were discussed in a recent meeting at the ministry and may be taken up with the finance ministry, they said.

The Central Electricity Authority (CEA) also has put up a case for a GST cut. “As the levy on the components is at 18% or above, the need is that the levies should at least be below the 18% slab. The recommendation to the finance ministry would be for bringing these items in the 5% slab as suggested by the stakeholders," said one of the two people mentioned above.

While on turbine and steel, GST stands at 18%, that on cement is at the highest slab of 28%. The push for lowering of GST comes at a time when the ministry is preparing a new hydropower policy which would soon be put forward to the union cabinet for its approval. Under the policy, states in the North-east holding rich hydropower potential may get central grants of around ₹4,000 crore to pick equity stakes in hydropower projects.

The policy would also look at rationalizing tariffs. The proposal to lower the GST also aims at lowering the tariffs among other objectives. Queries sent to the ministries of power and finance remained unanswered at press time.