2, which provided that the expression of interest includes hedging transaction charges under currency fluctuation. With the removal of this section if we do hedging transaction with the foreign bank that does not have a place of business in India we have to pay to WT. It eliminates the scope of our getting finer rates. This anomaly has to be corrected.
Power companies are enjoying tax holiday u/s 80-IA. There is a provision of 10 year tax holiday under income earned by power companies from a new project. But this provision does not give benefit to the investors investing in the equity and taking risks. The company gets the benefit. On the contrary the investor has to pay dividend tax, if he is getting dividend in the first year. To improve investments and to achieve our target of an additional 100,000 MW this provision must be extended to individual investors. The govt. has already removed the provision of tax free bonds which are available from 1984-92. In 1992 the allocation of tax free bonds was restricted to railways, telecom and housing sectors which was later gradually withdrawn. Except 54 EC of the REC and other institutions u/s 80-IA, no other institution or infrastructure is getting the benefit of tax free bonds.
Since the introduction of section 10-23G, PFC has been analysing projects and giving benefit directly. After the subsequent amendment it is made compulsory that the project authorities have to get approval from the CBDT. Normally the approval is given for three assessment years. The exemption should be given for at least as many years as in gestation period or upto 2006 as per the Act. Getting approval delays the benefit further. PFC is the only financial institution which is giving 1% tax in interest rebate for projects covered u/s 10-23G. We get the benefit of 0.70% in tax computation which we are passing by 1% reduction to projects covered u/s 10-23G. MOP must decide which project should come u/s 10-23 G instead of keeping the power with CBDT, since MOP is a nodal ministry having all the technical expertise.
Even though it is mentioned in section 80-IA read with 10-23G, that all T&D companies are eligible for getting the benefit, no T&D project has been approved u/s 10-23G. Power sector must be seen in totality. Generation cannot stand alone without T&D. So the spirit of the act should be extended to all, be it generation, transmission or distribution. For this, procedures have to be stream lined. This will have a great impact on the final tariff.
New instruments like tax paid bonds should be introduced. Just like dividend is paid on the tax at the time of declaration of dividend, at the time interest is