 "Budget 2016: Wind sector to take a hit as accelerated depreciation tax benefit capped at 40%")
The wind energy sector might take a major hit, with the Budget capping the accelerated depreciation tax benefit at a maximum of 40 per cent from April 2017.
The sector had enjoyed accelerated depreciation (AD) of 80 per cent under the Income Tax Act.
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Of the 25,188.39-Mw of wind power in the country, around 70 per cent is built on AD. Rest are independent power projects, whose share has increased over the years. Most of these projects get a generation-based incentive of 50 paisa per unit of power produced, introduced in 2011 Budget.
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“As the announcement is effective from next year, it will give industry time to prepare,” said a senior executive in the sector. “The sector would be impacted but we would have to wait for next year to see how the arrangement pans out, as hopefully a decision on GST (the Goods and Services Tax) would also come.”
AD is a tax benefit scheme that can be availed by anyone who sets up or invests in a wind farm irrespective of the power generated. About 80 per cent of the project cost is paid back if the plant is commissioned before September 30 of the financial year concerned or 40 per cent of the cost if commissioned before March 31.
“We hope the government will reconsider the accelerated depreciation (AD) limit. We wish to reiterate that the accelerated depreciation limit of 80 per cent should continue till 2022, aligned to the government target of 175 GW of renewable energy by 2022 and to boost manufacturing under the Make in India vision,” said Tulsi Tanti, CMD, Suzlon Group, a wind turbine manufacturer.
Till April 2012, the wind energy sector enjoyed two benefits — AD and GBI. AD has been in force for the wind industry since 2003. GBI was announced in 2011 and discontinued in 2012, only to be reintroduced in 2013 in the Budget.
India is the fifth largest wind power producer in the world after the US and China.
