CFI demands service tax exemption for power projects

The Construction Federation of India has sought service tax exemption for development of power projects, on the lines of other infrastructural works in the upcoming Budget.

"Service Tax exemption should be extended to development of infrastructure power generation, transmission and distribution projects," CFI said in a pre-Budget memorandum to the Finance Ministry.

This, it said, would also reduce the cost of power generation, as power producers are not entitled to credits on taxes paid on procurements.

As of now, these exemptions are granted on development of infrastructure projects, including roads, railways, airport, transport terminals and bridges among others.

CFI representation also sought exemption in service tax for services and goods exported to Nepal and Bhutan under project bonds financed by UN Agencies and Asian Development Bank.

The Federation, which has major construction and engineering firms under its umbrella, said goods supplied for setting up of nuclear power projects are eligible to refund of excise duty as Deemed Export benefits.

However, no formal notification has been issued providing excise duty exemption for nuclear power plants, it said.