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MNRE in favour of restoring accelerated depreciation benefits

According to reports, India’s ministry of new and renewable energy (MNRE) has taken up the issue of restoration of accelerated depreciation benefits with the finance ministry, said Piyush Goyal, India’s minister in charge of power, coal, and new and renewable energy, according to a statement after meeting the wind energy associations.

The plan is to revive interest in the wind energy sector by reintroducing the tax and fiscal incentive that was removed. The reinstatement of accelerated depreciation benefits would reduce tax and strengthen cash flows. Under the earlier accelerated depreciation benefit that was withdrawn by the Central Board of Direct Taxes in April 2012, wind power generation companies could claim a depreciation benefit of up to 80% of their investment in the first year of the project itself. The tax benefit on offer earlier had encouraged fraudulent schemes where investments in wind energy remained on paper and companies and individuals got extensive depreciation benefits.

The generation-based incentive (GBI), also withdrawn in April 2012, was aimed at discouraging investments that were merely aimed at availing tax concessions and promised 50 paisa for every unit of electricity generated by wind power firms. It was later reinstated. “Regarding providing additional funding for GBI and other wind activities, he (Piyush Goyal) said that he will take it up with ministry of finance. However, depending upon the funds availability, needful will be done,” the statement said. India has an installed power generation capacity of 2,48,510 megawatt (MW), of which 31,692.14MW is fuelled by renewable energy. Of this, 21,200MW is wind power capacity.

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