India's cabinet approved a proposal on Friday to give large power projects extra time to take advantage of tax incentives, as a part of efforts to cut power tariffs and help to reduce stress on banks saddled with bad loans.
From the date of import of equipments for power production, large power producers will now have 120 months to furnish details to tax authorities to avail of tax benefits, the government's spokesman Frank Noronha said in a tweet.
Reuters reported on Thursday that a proposal to extend time for power producers to avail tax benefits would be put forward for the cabinet's approval on Friday.
Power producers, who previously had up to 60 months to claim benefits, will now have more time to access up to 100 billion rupees ($1.5 billion) in incentives such as a waiver on import duty, income tax as well as export benefits.
The move will benefit power projects with a capacity of over 30 gigawatts (GW) worth about 1.5 trillion rupees ($23 billion), out of which only 11 GW has been commissioned so far, the power ministry said in a statement.
Adding 20 GW of new capacity could also help India cut bad loans at banks that have been saddled with $133 billion of stressed loans, mainly from the power sector.
(Reporting by Sudarshan Varadhan in New Delhi, editing by David Evans)