New Delhi: In a bid to encourage private investment in water supply works, government on August 31 decided to exempt machinery for setting up water purification and desalination plants from customs and central excise.

The Cabinet Committee on Economic Affairs (CCEA) also approved exemption from central excise for pipes needed for delivery from the source of supply of raw water to the plant and from plant to storage facilities, Finance Minister Jaswant Singh told reporters after the meeting.

As part of the fiscal concessions, government would exempt from customs as well as central excise duty all machinery and equipment required to establish plants for desalination, demineralisation, and purification of water.

On tax concessions, he said that there is already a provision in Section 80-IA of the Income Tax Act, 1961, which allows a deduction of 100 per cent of profits of companies engaged in the business of providing any infrastructure facility including a "water supply project" as also a "water treatment system".

In addition, plant machinery, equipment and buildings established for the purpose would be entitled to depreciation rate of 100 per cent per annum.

The scheme would come into effect immediately but concessions would not be available retrospectively, Singh said.

PTI