CLSA: Capital goods and Power Extension of Sec80IA by 1 year, as expected, for power projects. MAT increase neutralized by cut in surcharge

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Capital goods and Power
Extension of Sec80IA by 1 year, as expected, for power projects. MAT increase neutralized by cut in surcharge

Section 80- IA of the income tax Act has been
extended by one more year
Power projects commissioning before March 2012
would enjoy tax holiday for a period of 10 years
MAT rate increased from 18% to 18.5%
Effective tax rate remains same at ~20%
No impact on earnings of power companies
MAT to be paid by both SEZ developers and units
operating in SEZs
Adani Power will have to pay MAT going ahead –
already in our numbers
Excise duty on equipments for “expansion” of
mega and ultra mega power projects waived
BHEL would benefit from this as it will be more
competitive versus imports
1% excise duty on coal for power sector
Would be a pass through for all PPA related sales
Top picks – BHEL, CRG, Tata Power, JSPL, NTPC