After meeting with Navratna companies over relief from tax deducted at source (TDS), the Central Board of Direct Taxes (CBDT) has given a waiver in the regard to the power transmission utilities, including Power Grid Corporation. The tax deducted at source (TDS) levied on wheeling charges is now reduced to 2% from 10% earlier.
Power utilities have feared of the tax outgo, which was higher than their actual tax liability, could result in cash blockage. With the directive form the regulatory authority over enforcement of TDS rules, power utilities and distribution companies had started deducting TDS on wheeling charges paid to transmission firms from January this year.
To add more pains to the power utilities, Minimum Alternate Tax (MAT) is also being levied at 10%, which becomes 11.33% after including education cess and surcharge.