Delhi tweaks VAT norms to give Metro Rs1,546 cr loan

In order to speed up metro projects being executed in the national capital, Delhi government has decided to extend an interest-free loan of Rs1,546 crore to the Delhi Metro Rail Corporation, relaxing the existing rules for the same.

Under the existing norms, DMRC has to pay value-added tax to the city government on purchase of every item during ongoing projects, which is later reimbursed after verifying all purchases.

Delhi transport minister Gopal Rai said the government will extend the loan of Rs1,546 in three instalments - Rs646 crore in 2015-16, Rs450 crore in 2016-17 and Rs450 crore in 2017-18.

The decision was taken at a state cabinet meeting chaired by chief minister Arvind Kejriwal on Wednesday.

"We used to reimburse the VAT amount paid by the DMRC, but the process would consume time and often cause delay to projects. For instance, the government had reimbursed the VAT amount, which was to be paid in 2010 to the Metro, in 2014. As per the new rule, we will extend interest-free loan in advance which the Metro used to give to the government in the form of VAT," Rai said.

A senior official said the DMRC will now have to pay VAT on every purchase to the city government, and in return for this, government will extend a loan to the metro.

Recently, the AAP government accorded in-principle approval for construction of Metro Phase-IV. DMRC has set 2021 deadline for the phase-IV expansion, which would add 75 stations to the network.

A total of 31.47 km of new lines would be underground, while 64.39 km would be elevated. Delhi government has written to DMRC, saying it will go for the revenue sharing model adopted in the previous phases.

Among the projects chosen under Phase-IV are Rithala Narela (21.73km), Janakpuri West RK Ashram (28.92km), MukundpurMaujpur (12.54km), Inderlok Indraprastha (12.58km), Tughlakabad Aerocity (20.20 km), and Lajpat Nagar Saket G-Block (7.96 km).