The Hindustan Times reports of the tax breaks for companies and individuals for investing in green energy, especially Wind Farms.
WORRIED ABOUT your taxes? Take a look at one way how companies and high net worth individuals are reducing theirs – by buying windmills. The income-tax laws allow 80 per cent of the cost of the windmill to be set off against taxable income.
Private sector wind energy players have woken up to this opportunity and are offering investments in wind farms that they set up. In a shared wind farm, other companies can own anything from a single wind turbine to the entire farm. The electricity generated is sold to the state electricity board where the wind farm is situated. If an owner of a windmill wants to use the power he can draw it back from the board at a different point.
Mehta says the electricity being generated will begin to bring in revenues from the second year. If the owner can show itself as a power sector operator, it can gain more benefits under Section 80 (i)(a), under which income from power generation can get a tax holiday for 10 years. Now other companies like Enercon India and Vestas RRB have followed Suzlon with their own wind farms. In fact, wind energy is not the only form of green energy that enjoys that benefit, but this has become commercially viable. This benefit is also allowed for, among others, investments in biogas and solar energy too. Sun farms any one?
The interesting thing is that wind farms are commercially viable now, atleast in India and hence, the investments in them. However, the article was written from the angle of “ways to pay less tax, legally” style. The bigger picture is whether the tax break is driving an investment in wind farms.