Maharashtra State energy ministry has announced the norms to be followed by sugar factories for getting exemption from sugar purchase tax. These are applicable to the sugar factories that have cogeneration power plants and have been framed with an aim to promote renewable energy.
Cogeneration is a process wherein electricity and heat are produced simultaneously. The factories use the heat and part of electricity for themselves and sell the remaining electricity. The basic condition for getting exemption is that the factory must sell minimum 6 MW to MSEDCL. The extra power should be 7.5 million units (MU). The factory will then get an exemption for ten years. If its generation capacity is more than 6 MW, it will have to sell the entire power to MSEDCL for availing the benefit.
If the generation capacity is less than 6 MW it must be increased for getting tax relief. If the factory was set up before 2006-07, it will get exemption with retrospective effect only from 2006-07. In case it was set up after 2006-07 the relief will be from the year of commissioning. Private and BOOT factories can get tax exemption with retrospective effect only from July 14, 2010, as this was the date when norms for such factories came into effect.
In cases where the installed capacity is increased to take generation to 6 MW, the exemption will be till the loan taken for capital investment is repaid or 10 years, whichever is earlier. The capital investment should follow the thumb rule of Rs 5 crore per MW.
A factory will not get tax exemption if it owes dues to any government department. The finance department has been asked to work out modality of adjusting the dues against the exemption or for repayment. Under this scheme, the life of a cogeneration plant will be considered five years after that given in the eligibility certificate. If the plant closes down before its life is over, the sugar factory will have to return the tax exemption amount with 12% interest.
The factories will have to get an eligibility certificate from MSEDCL instead of Maharashtra Energy Development Agency (MEDA) for tax exemption. It will also have to submit a topping capacity certificate issued by Vasantdada Sugar Institute, certificates issued every year by sugar commissioner regarding sugarcane harvesting season, a certificate from state load dispatch centre (SLDC) that the factory supplied 100% of the contracted amount of power throughout the year and documents regarding capital investment.