Guidelines and notification issued by the Government for power generation, transmission and distribution in Special Economic Zone

We are pleased to release a Tax Alert on the guidelines issued by the Ministry of Commerce for power generation, transmission and distribution in Special Economic Zone (SEZ).

As per the guidelines, henceforth, no standalone power plant will be permitted to be set up in an SEZ in which there will be no other unit. Also, a power plant in the non-processing area of SEZ, set up by a developer/co-developer, will be entitled to fiscal benefits in respect of initial setting up of the plant.
Guidelines have also been issued in respect of power plants in IT/ITES1 SEZs. Such power plants will be allowed duty free import of raw materials and consumables for generation of power. Further, benefits have also been specified in respect of power plants located in SEZ and approved prior to 27 February 2009.
These guidelines will be effective from 16 February 2016.
In addition to the above, Notification No. 9/2016-Customs dated 16 February 2016, has been issued by Department of Revenue, Ministry of Finance to amend exemption Notification No. 12/2012 dated 17 March 2012. Structure of Custom duty on supply of electricity from SEZ to domestic tariff area has been revised vide the said notification 9/2016.