Service tax on power transmission likely to go

H S Brahma, secretary to the power ministry, today said the ministry would soon approach the finance ministry for abolition of service tax on power transmission that could benefit end consumers by way of lower tariff.

"We took up the issue of abolition of service tax with the finance ministry once, but the response was not great. We are going to take it up again soon," Brahma told reporters on the sidelines of the nationwide electricity conference at Vigyan Bhawan in New Delhi.

In the meeting of state power ministers and secretaries on Sunday, five states, including Andhra Pradesh, Himachal Pradesh, Jammu & Kashmir, and Kerala, asked power minister Sushil Kumar Shinde to approach the finance ministry for abolishing the service tax on power transmission.

At present, a service tax of 12.36 per cent is charged from power transmission companies. The states have been demanding total abolition of this tax.

Shinde requested the state governments to lay special emphasis on completion of work on power units. Strict monitoring of critical projects, facilitation in land acquisition, water allocation, and placement of order for balance of plant equipment was emphasised.

The country is set to add 62000 mw of power in Eleventh Five-Year Plan against the earlier target of 78700 mw, Shinde said.

The conference deliberated upon critical issues related to generation capacity addition, open access in transmission and distribution, rural electrification through the Rajiv Gandhi Grameen Vidyutikaran Yojana, and strengthening of sub-transmission and distribution system through the restructured accelerated power development and reforms programme.