| Date: |
22-02-2013 |
| Subject: |
Budget 2013: Treat natural gas on par with crude oil for tax exemptions |
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NEW DELHI: The oil and gas industry is hopeful that the budget may treat natural gas on a par with crude oil for tax exemption, which could revive investors' interest in future auction of oil blocks, but it does not see any strong commitment from the government on this matter.
"We can only hope, but the finance ministry is adamant that the matter, which is sub judice in various IT appellate tribunals, cannot be resolved through the Finance Bill," a senior executive in an upstream firm said requesting anonymity.
The uncertainty over tax holidays for natural gas producers began after the Finance Bill 2008-09 proposed to redefine the term 'mineral oil'. It said the term did not include natural gas for the purpose of enjoying a seven-year tax holiday. Consequently, while crude oil producers avail of the tax benefit, the same is not available to gas producers.
In the 2009 budget, former finance minister Pranab Mukherjee had made a one-time exception for NELP-VIII and allowed tax concession to gas production as well, but restricted the benefit to blocks awarded under that particular round.
Officials also expressed constraints in extending the tax holiday from seven to 15 years, one of the key demands of the Association of Oil Gas Operators (AOGO), which has over two dozen members including BP, BG, ONGCBSE 1.76 %, Reliance IndustriesBSE 1.24 % and Cairn IndiaBSE -0.83 %.
"It is unlikely that the finance minister will oblige. The country's financial situation is precarious and the finance minister is focused on fiscal consolidation," an official said requesting anonymity.
Source : economictimes.indiatimes.com
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