Reliance may get tax waiver on Dadri

The power ministry has suggested that Reliance's Dadri project could be given the benefit of minimum alternate tax and dividend distribution tax exemption in proportion to the power sold within the Special Economic Zone (SEZ).

The plant could be asked to pay the tax on the portion of the power it sells to the domestic tariff area, said officials.

The 7,480-MW project had not been given a clearance by the revenue department which feared revenue loss on account of non-payment of the two taxes.

As per the policy, power plants in SEZs, which are built by the developer and the co-developer of the zones, are exempted from paying Customs, minimum alternate tax and dividend distribution tax.

A mega power plant in the domestic tariff area is entitled to only a waiver of Customs. Officials said the finance ministry had sought comments from the power ministry, as the Dadri plant could later raise tariff issues if a significant portion of electricity generated by it was sold outside the zone.

They said over 80 per cent of the electricity would be sold outside the designated area as consumption within the zone was estimated to be 400-500 MW. The project is also likely to opt for inter-state sale of power, which would enable it to get Customs duty benefits under the mega-power policy.

"The benefit could be as much as 21 per cent of capital cost," said officials.

The Uttar Pradesh government is also considering extending sales tax benefits for the facility.

According to the details of the project submitted to the government, Reliance Energy Generation Ltd, the initial developers of the project, will set up a Special Purpose Vehicle for the SEZ.