The Federal Board of Revenue has agreed to give income tax exemption on the expansion of power projects by the Independent Power Producers (IPPs) operating in the country. Sources told Business Recorder on Wednesday that the FBR had received a proposal of Private Power and Infrastructure Board (PPIB) for extending income tax exemption on expansion of IPPs projects.
THE FBR MAY AMEND THE RELEVANT PROVISO OF INCOME TAX LAW FOR EXTENDING EXEMPTION ON 'EXPANSION PROJECTS OF ONLY THOSE IPPS WHICH ARE ALREADY IN OPERATION'Responding to the proposal, sources said that the FBR may amend the relevant proviso of income tax law for extending exemption on "expansion projects of only those IPPs which are already in operation". In this connection, the board would formally inform the PPIB about its concurrence through amendment in the law.
Sources said that the FBR has agreed with the draft summary of the PPIB to the extend exemption on expanding projects by the existing IPPs. Presently, the Income Tax Ordinance 2001 contains income tax exemption for only new IPPs. The IPPs wanted to expand their operations for production of more electricity, but income tax exemption is not available on expansion of project as per law.
The interpretation of present law says that new plant has to be established for obtaining income tax exemption. The IPPs have to form new company for availing exemption.
They said when the IPPs have their own infrastructure why they form a new company for availing exemption on expansion of existing projects. It would be easy for IPPs to arrange financing for fast track projects, already in operation. Sources added that keeping in view genuine argument, the FBR has agreed to the proposal of the IPPs.