The Gujarat government has requested the Union Finance ministry to exempt electricity transmission from service tax and keep transmission charges outside the purview of TDS, a senior state minister said.
"I had raised the demand of not levying service tax on transmission (of) electricity at the conference of power ministers held in Delhi on June 23," Saurabh Patel, Minister of State for Energy, told PTI on the phone today.
The Central Excise and Customs Department has started issuing notices to the state utility for paying service tax on transmitting and distributing electricity, he said.
The tax application, Patel said, has come because the power sector has been restructured.
Similarly, Income-Tax Department has started raising demand for deduction of tax (TDS) on payment of transmission charges, Patel said.
"I requested the Union Ministry of Power to take up the issues with the Finance Ministry of not levying service charges on transmission of electricity and for keeping payment of transmission charges outside the purview of TDS," he said.
These will defeat the entire purpose of restructuring and will be counter-productive to the objective of building a competitive power sector ensuring adequate, reliable and affordable energy, Patel said.
