Vadodara: Gujarat government has requested the Union finance ministry to exempt service tax on transmission of electricity and payment of transmission charges outside the purview of TDS provisions, a senior state minister said.
“I had raised the demand of not levying service tax on transmission electricity at the conference of power ministers held in Delhi on 23 June ” Saurabh Patel, minister of state for energy, said on Sunday.
The central excise and customs department has started issuing notices to the state utility for paying service tax on transmission and distribution of electricity, he said.
The tax application, Patel said, has arisen on account of restructuring of power sector.
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 actions will otherwise 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.
Penalty provision may be modified for residential and especially BPL consumers, where by penalty should not be more than three months billing. As these consumers do not have paying capacity, Patel said.
“Our entire objective of providing power to all by 2012 gets defeated to such consumers under the concessional schemes and on the other hand these consumers get disconnected immediately, within few months, Patel said.