Punjab Newsline
Power purchase through power exchanges may be costlier
VINOD KUMAR GUPTA
Tuesday, 02 March 2010
NEW DELHI: Power purchase through power exchanges is going to be costlier after levy of service tax on power trading in the recent union budget.

The burden of service tax, as proposed in the Union Budget 2010-11, would certainly impact the profit margin of power traders but in the end the service tax will be paid by the power purchasing utility.

The rates to be quoted by power exchange will clearly mention that all other taxes and duties shall be borne by the purchaser.

There are two fully operational power exchanges of the country namely Power Exchange India Limited and Indian Energy Exchange Limited .another exchange Multi Commodity Exchange deals in only short-term day-ahead transactions. There are many subsidiaries of companies dealing with power trading including NTPC.

It may be mentioned that less than 10 percent power is traded through exchanges and rest is done through mutual agreements.

Meanwhile Finance Minister had announced a complete waiver of service-tax on the transmission of power, against the 10% applicable on Tuesday. This move is likely to provide a significant impetus to bulk inter-regional transmission of electricity in the country. The exemption would also benefit the state-run transmission utilities, including Power Grid Corporation of India

It may be mentioned that Union Power Ministry had been lobbying with the Ministry of Finance for a waiver of service tax on all power sector projects.