DIRECT TAXES
| Oil firms seek 7-yr tax holiday in Budget Mon, 05 Mar 2012 17:13:00 +0530 |
| Business Standard Economy Policy news An association of private and PSU oil companies has demanded a slew of tax incentives, including income tax holiday for natural gas production and extending the same for oil refineries by another five years. In a pre-Budget memorandum to the government, the Petroleum Federation of India (PetroFed), a body comprising almost all public and private sector oil companies, sought seven-year holiday for payment of income tax to all refineries that are commissioned by March 2017. Currently, the tax breaks are available only for units beginning production by March this year. "This would ensure that India becomes the export hub which would put pressure on the product prices and bring down the international prices of sensitive products and would also enable reduction in under recoveries of the oil companies," it said. PetroFed said the period of tax holiday for both exploration and refining activities should be extended to 10 years as in case of power sector. "Government has granted 100 per cent tax holiday in respect of profits derived by undertakings engaged in the generation or generation and distribution of power for a period of any 10 consecutive years out of 15 years beginning with the year in which the undertaking starts generation or distribution of power," it said, adding hydrocarbon sector should be treated at par with power sector. "Hydrocarbon sector is quite critical for the speedy and balanced growth of any economy, especially ours in the context of the over-dependence on oil imports to meet our domestic demand which has significantly increased over the recent years in view of the robust growth," it said. It also wanted the definition of infrastructure sector be be expanded to include oil and gas pipeline. PetroFed said the the government had in 2009 extended tax holidays for production of natural gas from areas awarded under New Exploration Licensing Policy's (NELP) round-VIII. This "is clearly discriminatory in nature, since it denies the benefit to Production Sharing Contracts (PSCs) signed so far under the NELP/ CBM (Coal Bed Methane) policy, where the government is clearly bound under the doctrine of promissory estoppel to honour its commitment." Promissory estoppel prevents a person or institution from reneging on a promise. The association suggested inclusion of natural gas production for the purpose of availing income tax breaks. It also suggested abolition of the National Calamity Contingent Duty (NCCD) of Rs 50 per ton, saying the levy was imposed on domestic and imported crude oil in Union Budget for 2003-04 for one year but it has not yet been done away with. |
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