New Delhi: Finance minister Pranab Mukherjee on Monday restored to tax breaks on profits made from production and sale of natural gas, but restricted the benefit only to blocks to be awarded in the forthcoming auction, depriving firms like RIL of the gain.
RIL is producing gas from an area awarded to it under a similar auction 10-years ago.
Mukhejree, however, gave companies like Essar Oil a boost by extending the seven year holiday on payment of income tax to private firms that set up new oil refineries by 31 March, 2012. Previously, oil refinery in private sector coming after 1 April, 2009 were denied of the benefit.
Presenting the full budget for 2009-10, he said the tax holiday under section 80-IB(9) of the Income Tax Act would be available for companies on profits they earn from “the commercial production of mineral oil and natural gas from oil and gas blocks which are awarded under the New Exploration Licensing Policy (NELP) 8th round of bidding.”
The Memorandum Explaining the Provisions in the finance bill for 2009 stated that the tax benefit would be available on natural gas produced from blocks awarded under NELP-VIII, bids for which are yet to come in, and which “begin commercial production of natural gas on or after April 1, 2009.”
The budget document stated that the sun-set for tax holiday for private refiners sector at 31 March, 2009 was “extremely short” and so extended it by a further three years to 31 March, 2012. “The new terminal date will be the same for both the public and the private sector.”