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Our Bureau

New Delhi , Nov. 2

THE Government has announced a series of tax sops aimed at the GE and Bechtel's equity sale transaction of their Dabhol power project holdings to the special purpose vehicle promoted by NTPC Ltd and GAIL (India) Ltd.

According to a Taxation Laws (Amendment) Ordinance promulgated by the President late Monday evening, the income received by a foreign company from its Indian subsidiary for settlement of dues in connection with the revival of an existing power project taken over by an Indian player has been exempt from tax.

The provisions, thereby, provide for an income tax exemption to the money repatriated by the Indian subsidiaries of GE and Bechtel Corporation to their parent companies for the income received by them from the Indian lenders by selling their 85 per cent joint stake in the erstwhile Dabhol Power Company.

The Ordinance has also provided tax benefits for an undertaking owned by an Indian company involved in the reconstruction or revival of a power generating plant, provided the company is formed before November 30, 2005, with majority equity participation by public sector companies. The other condition incorporated in the Ordinance requires the undertaking to generate or transmit or distribute power before March 31, 2007.

The clause would enable the extension of tax benefits to the newly formed Ratnagiri Gas and Power Pvt Ltd, which has taken over the assets of the Dabhol Power Company. The company is owned by NTPC Ltd, GAIL (India) Ltd and the Indian lenders to the project are led by IDBI, ICICI Bank and SBI.

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